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FTR: Freight conditions still favoring truckers

Feb. 1, 2018
An expanding U.S. economy and ELD enforcement should keep trucking capacity tight for 2018.

Truckers should be able to stay in the catbird seat in terms of freight rates at least through the first half of this year, according to the most recent Shippers Conditions Index (SCI) reading compiled by research FTR Transportation Intelligence.

The firm explained that the SCI combines the impact of freight demand, freight rates, fleet capacity, and fuel prices into a single metric that provides an overall picture of market conditions from the shipper’s perspective.

The SCI’s November reading remained in “solidly negative territory,” according to FTR, hovering around minus 8.9.

“While capacity constraints could ease during seasonally weaker first quarter, the [U.S.] economy continues to expand and ELD [electronic logging device] enforcement is still around the corner, so shippers won’t find too much relief in the first half of the year,” noted Jonathan Starks, FTR’s COO.

“Markets will adjust as we move through the year, carriers will add some capacity, and shippers will develop more ‘carrier-friendly’ operations,” he added. “However, that will not stop the market from being severely taxed for a majority of 2018 and prices paid for the transporting of goods will reflect that reality.”

TL carrier Werner Enterprises highlighted that trend in its annual earnings report this week, noting that its average revenues per tractor per week increased 4.1% in fourth quarter of 2017 compared to the fourth quarter of 2016 due to a 4.7% increase in average revenues per total mile and a 0.6% decrease in average miles per truck.

“Freight metrics are improving and we have increasing confidence that contractual rates will strengthen over the next few quarters,” Werner said.

Landstar System Inc., which relies on owner-operators to haul freight, noted that the fourth quarter last year was “historic” as it was the first time it exceeded $1 billion in revenue for a single quarter.

Landstar’s President and CEO Jim Gattoni noted in the company’s earnings report this week that it also set quarterly records in fourth quarter last year for many other financial metrics, including revenue, gross profit, operating income, net income and diluted earnings per share.

The number of loads hauled via truck in the fourth quarter of 2017 also hit an all-time high for Landstar, Gattoni said, driven by a 2% increase in the number of loads hauled via its dry van operators, a 4% increase in the number of loads hauled via flatbed drivers, and a 9% increase in LTL volume.

“The pricing environment for our truckload services was strong throughout the fourth quarter,” he added. “Industry-wide truck capacity was tight resulting in year-over-prior-year increases in revenue per load on loads hauled via truck of 11%, 14% and 14% as compared to October, November and December of 2016, respectively.”

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