FTR’s Trucking Conditions sees continued strength as expected late year decline looms

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dockThe Trucking Conditions Index, produced monthly by FTR, continued to move higher in September and approach what FTR calls a “solidly favorable range for trucking companies.” However, uncertainty in Washington and constricting hours-of-service rules are set to knock the index off kilter a bit in the coming year.

FTR forecasts that the index will peak in October, when that data is available, before slowing freight growth and capacity constraints of the new hours regulations begin to act as detriments to trucking conditions.

The slowing freight growth, however, could mitigate the capacity crunch caused by the hours rule constrictions, FTR says.

The index is a “full collection of industry metrics,” FTR says, and any reading above zero shows a “generally positive environment for truckers.” Any reading above 10, however, “would signal that volumes, prices and margins are likely to be in a solidly favorable range for trucking companies.”

“Pricing acceleration has started to show up in the data but it is easily hidden from view because the year-to-year comparison remains weak,” said FTR’s Jonathan Starks, the firm’s director of transportation analysis. “This weakness is due to the falling rates that we had during the first half of the year. Month-to-month rates started moving higher in July and August which we fully expect to continue during the fall shipping season. Stronger growth, and significant y/y growth, are likely to hold off until the spring shipping season. By that time fleets will have been dealing with enough capacity and driver issues to begin moving contract rates higher. Spot rates have already shown some of these signs.”