Despite a sizeable increase in fuel costs, FTR’s Trucking Conditions Index strengthened marginally due to strong freight rates and improved freight demand.
The TCI increased to 12.06 from 11.46 in January.
Though, the record surge in diesel prices during March almost certainly will send the TCI measure into negative territory for the first time since May 2020 once that data is finalized, FTR officials said in a press release.
The TCI is forecast to recover to positive territory in April and beyond, but signals of potentially weaker demand and rates than currently forecast could temper that outlook, especially if fuel costs remain volatile.
“The truck freight market has entered the inevitable period where conditions for carriers are transitioning from uniformly strong to those that will be more variable from month to month and from segment to segment,” Avery Vise, FTR’s vice president of trucking, said. “Uncertainty is high on both the demand and supply sides. Consumers generally remain strong financially, but prices are soaring, which undercuts buying power. Demand in the industrial sector remains high, but the supply chain still meters output, and the durability of that demand is not a given. Meanwhile, the implications of a spot market that is starting to normalize are unclear owing to the unprecedented shift of volume and capacity into the spot market since the rebound in mid-2020. It is premature to declare doom and gloom for carriers or major relief for shippers, but both should be weighing threats and opportunities.”
The TCI tracks the changes representing five major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fuel price, and financing. The individual metrics are combined into a single index indicating the industry’s overall health.
A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. Readings near zero are consistent with a neutral operating environment, and double-digit readings in either direction suggest significant operating changes are likely.