FTR Trucking Conditions Index shows strong growth
October’s reading of 9.48 far outpaced September’s 3.5, with FTR explaining that a strong economy, combined with pressure from hurricane recovery and the ELD mandate, is creating a very tight market resulting in improved contract rates.
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Freight transportation consultancy FTR reported this week that the most recent edition of its Trucking Conditions Index (TCI) continued to trend in the right direction in October, the most recent month for which data is available.
The TCI reflects tightening conditions for hauling capacity and is comprised of various metrics, including capacity, fuel, bankruptcies, cost of capital and freight.
According to FTR, a TCI reading above zero represents an adequate trucking environment, with readings above 10 indicating that volumes, prices and margin are in a good range for carriers.
October’s reading of 9.48 far outpaced September’s 3.5, with FTR explaining that a strong economy, combined with pressure from hurricane recovery and the ELD mandate, is creating a very tight market resulting in improved contract rates. What’s more, even though the TCI is at a high level, FTR said it could continue to rise during the first half of 2018. But it came with the caveat that it will likely be followed by softening in industry conditions in the second half of 2018 due to slower freight growth, albeit still equating to solid conditions for carriers.
“The TCI is nearing a double-digit number, which indicates that there are big opportunities for carriers with regard to both rates and the loads they choose to carry,” said FTR COO in a statement. “Of course, there are still quite a few ‘ifs’ in the near future. If the economy can continue to grow at around a 3% rate in Q4 and 2018Q1, we will see freight demand maxing out any excess capacity. If the ELD implementation and enforcement stay on track, the spring will bring capacity utilization over 100% and the freight transportation market will be scrambling to align loads and trucks. If severe winter weather comes into play, transportation managers will be facing their toughest year since 2004. Carriers should be prepared for big changes, and big opportunities.”
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