Fleet Management

FTR Trucking Conditions Index Higher for November

January 12, 2015

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FTR’s Trucking Conditions Index for November, at a reading of 8.98, reflects dropping fuel prices, according to the transportation research firm. Strong freight volumes from a good Christmas shopping season also helped.

FTR expects the index to remain in a "normal" range for a tight trucking market throughout 2015, with readings in the 8-9 point range. Trucking capacity will increase somewhat in 2015 as truck utilization falls following the suspension of productivity-cutting provisions of the 34-hour restart.
 
"With a new year comes new issues to deal with, but the old ones haven't gone away. Or have they?" comments Jonathan Starks, FTR’s director of transportation analysis.

Diesel fuel prices have dropped nearly 20% over the last year, and nearly all of that drop has occurred over the last six months. After a year that started with severe weather, which kept truck capacity limited until summer, December brought welcome relief as the congressional budget bill removed one of the restrictions keeping driver productivity down.

Finally, an economic recovery that couldn't seem to gain any traction rebounded in the second quarter and then accelerated in the third quarter, hitting 5 percent in the third quarter -- a level not achieved since 2003, and the strongest two quarters of growth this recovery, Starks points out.
 
“The drop in diesel prices is a dramatic change in the operating environment for carriers after a four-year span in which fuel prices were nearly stagnant," he says. "This drop is the single biggest contributor to November's improvement in the TCI and is expected to continue to push the TCI higher when the December results are in. Conversely, carriers will take a hit to margins when fuel costs inevitably rise. It remains to be seen if the drop in fuel costs will benefit rate negotiations in early 2015."
 
The TCI is included in FTR's monthly Trucking Update, which reports data that directly impacts the activity and profitability of truck fleets.

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