Trucking Conditions Index Reflects Unprecedented Capacity Constraints
April 02, 2014
A new report shows business conditions in the trucking industry remain positive, despite a slight downturn, amid caution of a possible capacity shortage.
The Trucking Conditions Index reading of 7.54 for February continues to reflect good news for trucking fleets, but is also a warning to shippers seeking carriers to move their goods, according to the freight forecasting firm FTR.
It notes the severe winter weather likely had a bigger impact and is not getting picked up by the index. When you adjust for weather, the TCI reading would be pushed above a reading of 10, certainly making this the tightest truck market on record, according to FTR. It expects the TCI to remain in this range throughout 2014, impacted by truck freight demand accompanied by regulatory drag hindering available capacity.
“The most recent weekly spot market data shows that the spring thaw has come to truck demand with spot market capacity up and load activity down slightly, a plateau versus the last couple of months when both demand and pricing spiked while capacity was severely constrained,” said Jonathan Starks, FTR’s director of transportation analysis “Both carriers and shippers have to be on the lookout for a potential tipping point when freight demand is able to keep the current high level of truck use well into the summer months”
He said such an environment would necessitate shippers bidding up rates to maintain secure capacity during the fall shipping season. FTR says as it continues to evaluate the freight environment it currently sees enough moderation in truck demand to get through the year without a crisis but cautions it would only take a relatively modest and short uptick in the industrial sector for capacity to tighten significantly further.
“We advise everyone to stay tuned to the manufacturing data to see if the thaw continues,” he said.