Source: FTR

Source: FTR

FTR’s Trucking Conditions Index fell slightly in March despite positive economic conditions, reversing an upturn from the previous month.

The March TCI fell back to a reading of 2.97 after hitting 5.11 in February. However, FTR analysts say steady improvement in spot rates indicates that a market-wide move to capacity tightness is on the way. Tightening capacity is expected to correlate with an upswing in the TCI throughout 2017 and into 2018.

“The TCI has settled into a positive, but not robust, level of market conditions over the last 12 months,” said Jonathan Starks, chief operating officer at FTR. “The main reasons for the reduction in the March TCI stems from slightly weaker freight activity, reduced estimates of capacity tightness, and continued weaker-than-expected conditions for contract rates.”

FTR is confident in the freight market for 2017, which started off the year strong in the first quarter. FTR’s forecast has moderated somewhat for the regulatory headwinds affecting trucking, but it still expects them to have a significant effect toward the end of 2017 and for most of 2018.

“Trucking conditions are likely to stay in this moderate range until late this year when the ELD mandate comes into effect,” said Starks. “Once you combine the productivity hit coming from full implementation of ELDs with continued freight growth and the capacity reductions that have already occurred, you get a market that is poised to see significant movement in rates.”

The Trucking Conditions Index tracks the changes representing six major conditions in the U.S. truck market. These conditions are freight volumes, freight rates, fleet capacity, fleet bankruptcies, fuel price, and financing. The individual metrics are combined into a single index that tracks the market conditions that influence fleet behavior.