BLOOMINGTON, Ind. – FTR’s Trucking Conditions Index (TCI) for May fell 25% to a three-year low of 4.91 because of softer capacity, pricing and fuel prices.
According to FTR, tight capacity from earlier in 2015 has eased after the partial suspension of the latest Hours of Service changes. FTR predicts the Trucking Conditions Index will soon move up into more positive territory in the coming months.
“While the market has notably softened, conditions for fleets are still quite positive and indicate how well they are able to manage the current headwinds,” said Jonathan Starks, FTR’s director of Transportation Analysis.
“One significant benefit is that fuel costs have dropped substantially and have yet to significantly rise. A sharp rise in diesel would be very troubling for many of the marginal carriers. Another benefit has been the slow growing freight environment which has allowed fleets to re-engineer their lanes in order to take better advantage of drivers hours. While the capacity situation has definitely eased since last year, it is still well above historical levels and should keep contract rates, at minimum, stable with a potential to grow stronger by early 2016. Overall, the market is stable, and we see that path continuing until we get into 2016, when recession and regulatory risks begin to rise significantly.”
Data shows that improvements in productivity and reductions in fuel prices have kept costs in check until now. But, with the recovery now fully maturing, fuel and other costs, like labour, should increase, putting more pressure on rates early next year.