Fuel the wildcard now that winter freight lull over: FTR

NASHVILLE, Ind. – Continued economic growth mixed with the impact of new safety regulations will produce sufficient freight to stress capacity until mid 2012, says trucking market analysts FTR Associates.

FTR’s Trucking Conditions Index, as reported in the March Trucking Update, rose to 9.1 in January from a December reading of 7.1.

The Trucking Conditions Index is a compilation of factors affecting trucking companies and has been rising steadily since October 2010. Any reading above zero indicates a healthy trucking environment.

"Good freight demand and tightening capacity are allowing truckers to push freight rates higher," says Eric Starks, president of FTR. "We expect to see significant movement as we leave the winter freight lull behind in March."

Starks says that expectations for improving freight conditions are increasing in the near-term, but the effects of "regulatory drag," on the industry will be concentrated late in the year and into 2012.

Some challenges still lie ahead, though — like higher equipment and labor costs — but FTR thinks those factors should be outpaced by the improving rate environment.

Fuel prices remain the wildcard.

The recent sharp run-up in fuel costs due to Mideast unrest (not yet reflected in the TCI), if sustained, will put a great deal of pressure on marginal carriers," says Starks. "The time lag between the increase in the cost of diesel and their ability to recover the cash via fuel surcharges will put stress on already-shaky balance sheets.

"The net result might be a further tightening in capacity as marginal carriers succumb, provided that the oil price run-up is not so severe as to adversely affect the recovery itself."  

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