Trucking Conditions Reflect Slow Freight Growth

June 8, 2016

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Source: FTR
Source: FTR

The FTR Trucking Conditions Index for April was up over the previous month, but still not significantly better-- reflecting soft market conditions affecting the trucking sector, according to FTR.

The trucking market is in the midst of a slowdown with truck freight growth slowing. FTR is forecasting a transition to moderate growth toward the end of the year, but there is a chance that freight could slow further.

Freight-driven capacity restraints are unlikely over the next few years. However, future regulations could have an adverse effect on capacity.

“There is enough uncertainty swirling around the trucking markets right now to force a manager or business owner to keep the antacids handy," said Jonathan Starks, chief operating officer at FTR. “Spot market rates are still negative, contracts rates are moving in that direction, and freight growth has stalled out for several segments.”

On the positive side, the driver shortage is not as immediate a concern as it has been and the economy is relatively solid, according to FTR.

However, high inventory levels may be an indication of a downturn on the horizon. The current inventory levels are at the highest point ever recorded outside of a recession in the 21st century.

“Does that mean we are heading into a recession? Perhaps, but not definitively,” said Starks. “The other conclusion is that higher inventory is the new norm, and it’s just going to take some time for supply chains to optimize their inventories. That could slow freight growth, but wouldn’t put the brakes on truck demand.”

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