Fleet Management

Tighter Capacity Fuels Improved Trucking Conditions

October 26, 2016

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Source: FTR
Source: FTR

The FTR Trucking Conditions Index saw an increase in August fueled by tighter capacity brought about by looming regulations.

The TCI increased to a reading of 6.76, continuing a steady rise that is expected to hold sway throughout 2017. Tightening capacity results in better pricing and margins for trucking companies.

“The July and August increases in the Trucking Conditions Index were led by positive changes in capacity utilization and fuel prices,” said Jonathan Starks, FTR's COO. “Fuel prices look to have stabilized during the fall and are unlikely to have a big impact on transportation markets until oil prices move substantially away from $50 per barrel.”

The improvement is largely from the supply side, said FTR, as the current economy and freight markets are in a slow growth phase with unclear direction. FTR expects the TCI to peak in early 2018.

Despite weak reports from truckload carriers, there have been moderate improvements to overall fleet utilization - a trend that FTR believes will remain subdued until mid-2017 when more fleets act to comply with the electronic logging device mandate.

“The third quarter is likely to be the nadir for weak reports and we should begin to see economic improvement,  easier year-over-year comparisons, and better overall market conditions as capacity tightens up due to regulations,” said Starks.

“Spot market conditions are beginning to affirm this," he added, "with the dry van market on Truckstop.com showing positive year-over-year comparisons for both load volumes and rates.”

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