Fleet Management

Trucking Conditions Index Drops As Capacity Utilization Softens

April 13, 2015

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FTR's Trucking Conditions Index Graph showing this year's numbers compared with 2014. Graph via FTR
FTR's Trucking Conditions Index Graph showing this year's numbers compared with 2014. Graph via FTR

The FTR Trucking Conditions Index for February fell slightly in February to a reading of 7.4, reflecting a softening capacity utilization caused by fluctuating diesel prices and the suspension of controversial provisions of the 34-hour restart.

Despite falling from the January reading of 7.8, FTR predicts a rise into the summer months and beyond with double digit positive readings possible before 2016. The increase is expected to come as the industry faces more regulatory drag.

"We are beginning to hear of pushback from shippers about the continued rise in freight rates," said Jonathan Starks, FTR’s director of transportation analysis. “While we still expect all-in per mile rates to be fairly flat for most of 2015, base rates for trucking (and specifically contract rates) are still showing solid year-over-year gains.”

Fuel costs and spot market activity are causing shippers to question the continued increase in freight rates.

“Fuel costs are down 40% and, since fuel is about a quarter of trucking’s costs, it is a big deal,” said Starks.

Spot freight rates are also well below last year’s levels, but Starks added that harsh winter weather in 2014 was to blame for rates jumping as much as 20% during parts of the year, which has made 2015 rates seem particularly weak.

“After accounting for the drop in fuel during the year, spot rates are only down modestly during 2015, but this is opposed to the gains being seen for dedicated and contract rates,” said Starks “It takes careful explanation to educate shippers on why trucking costs are going up – but it is certainly a necessity in order to attract and retain quality drivers."

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