FTR’s Trucking Conditions Index (TCI) for February reflects an environment for carriers that has never been better.
The current reading of 15.41 is the highest since FTR began tracking the conditions index in 1992. The index jumped four points from the January reading and could improve still more through (at least) Q2, fueled by an even stronger economy. The first quarter of the year is typically a soft period for freight growth, but not in 2018. FTR’s Truck Loading Index, which is a major component of the TCI, should see a growth of 4% to 6% year-over-year into 2019. Rate stabilization and labor/equipment costs that soften carrier margins could moderate the TCI reading in the second half of the year.
Details of the February TCI are found in the April issue of FTR’s Trucking Update. The ‘Notes by the Dashboard Light’ section in the current issue reports on the mood of carriers attending the Truckload Carriers Association meeting in late March. Along with the TCI and ‘Notes by the Dashboard Light,’ the Trucking Update includes data and analysis on load volumes, the capacity environment, rates, costs, and the truck driver situation.
“For carriers, there is a feeling of ‘Let the Good Times Roll,’ and the data is backing that up. We are approaching record level spot rates, freight demand remains elevated, and the economy continues to grow at a good pace," said Jonathan Starks, COO at FTR. "If there is any frustration, it is having to turn away loads due to a shortage of drivers. We have had record levels of trucks and trailers ordered in the first quarter of 2018 and, as that equipment is delivered, we may see some of the capacity pressures relieved. More likely is that freight demand will gradually slow over the course of the year. This can be a challenging time for carriers as they try to balance the short-term and long-term needs of the business. This freight environment won’t stay around forever, and both carriers and shippers will be striving to balance those competing requirements.”
The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel price, and financing. The individual metrics are combined into a single index that tracks the market conditions that influence fleet behavior. A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. The index tells you the industry’s health at a glance.
In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns you of a problem, while readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment, and double-digit readings (both up or down) are warning signs for significant operating changes.