FTR's Trucking Conditions Index for May at 12.4 is unchanged from the previous month, continuing to reflect a positive environment for trucking. The TCI is designed to summarize a full collection of industry metrics, with a reading above zero indicating a generally positive environment for truckers. Readings above 10, as they are now, signal that volumes, prices, and margins are likely to be in a solidly favorable range for trucking companies.
The current positive TCI level is based on expectations of rising rates and margins due to tightening capacity conditions. FTR expects these conditions to continue indefinitely, either until the next round of trucking regulations are rolled out that will further tighten capacity or an unexpected recession significantly reduces freight demand.
FTR analysis shows strong year-over-year volume growth in truck freight. However, monthly growth has slowed and that should persist over the next few quarters in part due to slowing industrial production.
"The trucking industry has seemingly been stuck in a holding pattern for the last year or so," says Jonathan Starks, director of transportation analysis for FTR. "Rates have only moved slightly higher and freight growth, while strong at the end of 2012 and early in 2013, has generally been modest.
"Barring an external change in the marketplace, we believe that the HOS changes, in conjunction with the other numerous regulations already implemented or soon to be, will be enough to change the supply and demand equation in favor of the truck fleet. That is why we expect a noticeable uptick in rates by the end of the year."
However, he says, "the weaker manufacturing sector has probably limited any chances of seeing a true capacity crisis in 2013 - we need some additional economic growth to envision that possibility."