FTR’s Trucking Conditions Index in August slipped from July’s 12.4 reading to a still robust 11.5 as the run-up in freight rates basically stabilized. Rates remained by far the largest positive for the TCI, but they were only slightly stronger than they had been in July. Fuel costs were a mild drag on financial conditions while capacity utilization and financing costs remained favorable for carriers. Despite record high diesel prices in September, the index is expected to remain solidly positive through the two-year forecast horizon.
Avery Vise, FTR’s vice president of trucking, commented, “Although fuel costs have moderated somewhat since then, the surge in diesel prices to successive record highs in September has introduced a wild card into the truck freight market. As we noted last month and explored in more detail in our October report, if fuel costs were to force out many small carriers, the shift of drivers to larger carriers could relieve some of the tightness in trucking capacity. While spot rates remain quite robust, cash flow has become more critical. High diesel prices alone would have only a modest impact on overall market conditions, but they might trigger other changes that could be more meaningful.”
The TCI tracks the changes representing five major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. The individual metrics are combined into a single index indicating the industry’s overall health. A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. Readings near zero are consistent with a neutral operating environment, and double-digit readings in either direction suggest significant operating changes are likely.
