A number of indications point to a generally positive outlook for truckers, according to FTR’s just-released Trucking Conditions Index (TCI) for April. As reported today, the June 2013 Trucking Update shows a “strongly favorable environment for trucking,” increasing another 0.7 points for the month to a reading of 13.8.
The TCI summarizes a collection of industry metrics, with a reading above zero indicating a generally positive environment for truckers. Readings above 10 — as they are now — signal that volumes, prices, and margins are likely to be in a solidly favorable range for trucking companies.
The report for April suggests that modest rate increases should resume with freight enjoying reasonable volume growth alongside the reduced trucking productivity that is the result of increased regulations. It also forecasts that new regulations will take at least 3 percent out of trucking capacity. The report says a soft fuel market will keep overall freight rate increases (rates including fuel) below normal recovery levels.
However, the FTR report sees a significant increase in base prices due to the effects of hours of service and other rulings negatively impacting trucking capacity.
“Recent data points to a fragile manufacturing sector,” said Jonathan Starks, director of transportation analysis for FTR. “This is a concern as industrial movements account for a significant portion of truck freight. Despite the concern, I believe that manufacturing is pausing rather than starting a downturn.
“As long as the modest economic growth continues, trucking should be able to show further growth in 2013. The bigger concern is how the industry reacts to the fast-approaching hours of service start on July 1,” Starks said. “The markets have been in supply and demand equilibrium since late in 2011. As such, rates have been very stagnant amid a strong TCI reading because the market tends to react to changes in market conditions. We believe that our expected 3 percent hit to productivity is enough to break that equilibrium and generate substantial rate improvement by the end of the year.”