Freight conditions stay positive, FTR says

Research firm’s index indicates truck utilization is nearing 100%, yet ELD mandate remains a “wildcard” where industry capacity is concerned.

The Trucking Conditions Index (TCI) compiled monthly by research firm FTR Transportation Intelligence remained “basically unchanged” in May but also indicates that a strengthening spot market indicates that freight conditions for trucking companies are becoming more positive.

Spot market volumes and pricing have been up year-over-year for several months, and although contract market prices are still weak, before fuel adjustments, the firm said the “freight environment remains strong,” although economic conditions are fluctuating enough that freight growth could weaken. 

“We are now at the beginning of the third quarter of 2017, and spot market pricing is showing solid double-digit increases over last year. It is becoming increasingly clear that the weak pricing in the contract segment cannot be sustained for much longer,” noted Jonathan Starks, FTR’s COO, in a statement.

“In reviewing data from the publicly-traded [motor] carrier first quarter reports, we have seen that there was no notable reduction in the underlying costs,” he added. “That means that rate increases will need to be forthcoming or margin compression will quickly impact their bottom line.”

Starks emphasized that the “wildcard” in all of this continues to be the implementation of the electronic logging device (ELD) mandate in December.

“Capacity has already tightened, and the market will tighten further as full ELD implementation occurs,” he explained. “But if [freight] growth does slow, that may mitigate the potential for critical capacity issues with the onset of ELD implementation at the end of the year.”

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