War in Ukraine creates risks for trucking conditions: FTR

The war in Ukraine is putting downside risk on trucking conditions, according to FTR’s Trucking Conditions Index (TCI).

The index in January fell from 14.45 to 11.45 due to rising diesel prices, even before the war broke out. FTR reports higher freight rates more than offset the effects of rising fuel costs, but volumes slipped. And a record surge in fuel prices will hit carriers in the near term, FTR reported.

It says its TCI remains positive but downside risks have “increased greatly.”

“The war in Ukraine has introduced a high level of uncertainty into the dynamics of truck freight. Sharply higher fuel costs for carriers are a given, but we do not yet know whether sharply higher gasoline prices on top of strong pre-existing consumer inflation and big swings in the stock market will lead to a drop in consumer spending,” said Avery Vise, FTR’s vice-president – trucking.

“Another important factor is the fate of small trucking firms – especially the tens of thousands of for-hire carriers created since mid-2020 – following the unprecedented surge in diesel prices. Many will fail, but whether that outcome strengthens or weakens today’s rate leverage for carriers depends greatly on whether failing carriers’ drivers quit the industry or return to driving positions for larger carriers. We generally would presume the latter, which could relieve some rate pressure, but the labor market has changed too much during the pandemic to make that a sure bet.”