Freight fell in December due to rising fuel costs

FTR’s Trucking Conditions Index (TCI) fell in December, but the blame lies squarely with higher diesel prices. The TCI declined to a reading of 8.51 from the 10.46 reading in November, but index components related to freight demand, rates, and capacity utilization were very slightly stronger.

“Although the broader economy hit some soft spots as 2020 closed, freight demand remains robust,” commented Avery Vise, FTR’s vice president of trucking. “Key metrics of the pandemic have improved sharply since the middle of January, and people are getting vaccines. The latest round of stimulus should at least maintain a floor on consumer spending, and the industrial sector continues to recover steadily.”

The fuel cost component of the index recorded its largest negative change in more than three years. FTR forecasts index readings in the high positive single digits through 2021.

“Even if freight demand were to stall, though, unusual constraints on the supply of drivers likely will prolong tight capacity. We expect a noticeable loosening as the pandemic fades and millions of Americans rejoin the labor pool,” Vise added. “However, pandemic-related constraints on training and licensing of new commercial drivers have limited the driver pool and will impede a rapid return of capacity. Also, the drug and alcohol clearinghouse already has removed more than 45,000 drivers, and that number rises each day.”