Trucking Conditions Index Shows Improvements

Business conditions in the trucking industry improved dramatically the final month of 2014, according to a new report from the transportation forecasting firm FTR.

Its Trucking Conditions Index for December increased 30% from November to a reading of 11.80, its highest level seen last year, as freight growth remained strong and contract rates continued to rise.

FTR said it expects a modest relaxation of capacity constraints in 2015, along with a bounce back in diesel prices, to keep the index in an eight-point to nine-point range through the year.

"Fleets were hitting their stride to finish the year, led by a dramatic drop in diesel prices and continued strength in contract pricing,” said Jonathan Starks, FTR’s director of transportation analysis. “However, there are several indicators that lead us to exercise caution as 2015 plays out.”

The first, he noted, is diesel prices have to stop going down, and recent data shows that is occurring. “That leads to a strong potential for diesel prices to rise later in the year. FTR’s outlook assumes modest increases, but the energy markets don’t always work that way,” Starks said.

The second indicator, he said, is capacity was finally added to the marketplace as the hours of service regulations changes were implemented in December. “Truck ordering activity at the major builders hit 375,000 units in 2014, well above the 295,000 units that they actually produced, Those units will spill over into 2015 as carriers add or replace the trucks in their fleets.”

Lastly, according to Starks, is spot market data from truckstop.com highlights that the market has returned to normal this year following a very capacity-constrained winter and spring in 2014. “That will make year-over-year comparisons look much worse until late in the year. Despite these worries, the market is still running pretty tight and economic growth is anticipated to stay at a solid pace. Look for truckers to be hit by both headwinds and tailwinds during 2015 but be able to stay the course.”