Trucking Conditions Expected to Remain Negative

Weaker freight rates and an end to the sharp drop in diesel prices deteriorated trucking conditions in September, according to FTR.

FTR’s Trucking Conditions Index fell to a -2.35 reading from a near-neutral -0.25 in August. 

The negative factors in the month were partially offset by stronger freight demand and capacity utilization. Overall, the largest negative contributor to September conditions was the cost of capital as the Federal Reserve battles inflation with higher interest rates. However, financing costs were only a slightly more negative factor in September than they were in August, FTR officials said in a press release.

“After 18 months of mostly double-digit TCI readings, the index has been negative in all but one month since February,” Avery Vise, FTR’s vice president of trucking, said. “We expect market conditions to remain mildly negative for carriers in most months at least through 2023, but that weakness likely will not mirror the strength seen in late 2020 through early 2022. Trucking companies that managed their businesses well during the good times should remain healthy and outperform those that had relied on a robust market to remain afloat.”

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 prices, and financing costs. 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.