The index has fallen since January and except for April, has been lower than in 2014.

The index has fallen since January and except for April, has been lower than in 2014.

FTR’s Trucking Conditions Index measure for May dropped to a three-year low of 4.91 due to softer capacity, pricing, and fuel prices. The number is 25% lower than an earlier tally, but still in positive territory because overall conditions remain good, the research firm said.

Tight capacity from earlier in the year has eased following the partial suspension of the latest Hours of Service changes. FTR predicts the Trucking Conditions Index will soon move up into significantly more positive territory as the anticipated regulatory drag in 2016 and 2017 dramatically tightens capacity.

For the overall trucking environment, improvements in productivity and reductions in fuel prices have kept costs in check until now. However, with the recovery now fully maturing, fuel and other costs, like labor, should increase, putting more pressure on rates in early 2016, the FTR report said.

"While the market has notably softened, conditions for fleets are still quite positive and indicate how well they are able to manage the current headwinds,” said Jonathan Starks,  FTR’s director of transportation analysis. “One significant benefit is that fuel costs have dropped substantially and have yet to significantly rise.

“A sharp rise in diesel (fuel) would be very troubling for many of the marginal carriers. Another benefit has been the slow growing freight environment which has allowed fleets to re-engineer their lanes in order to take better advantage of drivers’ hours.

“While the capacity situation has definitely eased since last year, it is still well above historical levels and should keep contract rates, at minimum, stable with a potential to grow stronger by early 2016,” Starks said. “Overall, the market is stable, and we see that path continuing until we get into 2016, when recession and regulatory risks begin to rise significantly.”

The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market: freight volumes, capacity utilization, fuel price, cost of capital, and fleet bankruptcies. The individual metrics are combined into a single index that tracks the market conditions that influence fleet behavior. Details of the May TCI are found in the July issue of FTR’s Trucking Update.