The trucking conditions index (TCI) compiled by research firm FTR Transportation Intelligence witnessed a four point jump in April to a reading of 7.03 compared to March; a sign that trucking industry conditions are expected to improve despite current year-over-year weakness in contract freight pricing.
The firm said freight demand is moving higher as the industrial sector continues to improve with trucking capacity tightening, with the first quarter of this year registering the second strongest freight growth of the current recovery.
For the balance of 2017, however, freight demand is expected to grow more modestly, noted Jonathan Starks, FTR’s COO.
“Overall, our expectation of improvements in freight demand for 2017 is coming to fruition. However, we are seeing a significant difference between the contract [rates], specifically those in more dedicated routes, and the spot market,” he explained in a statement.
Starks pointed out that while contract freight is showing limited load growth and weak pricing, spot market indicators are “telling a very different story,” with load activity in early June was up more than 50% compared to the same time last year.
Importantly, truck capacity in the spot market is down during that same time, he said.
“This has led to significant rate increases for spot moves, with the average rate up more than 10% on a year-over-year basis,” Starks added. “We typically see spot markets move prior to the contract arena, so we would expect to see stronger contract pricing negotiations as we finish 2017 and head into 2018. The market is gaining strength, and conditions for [motor] carriers are showing significant improvements.”
