BLOOMINGTON, IN – The Trucking Conditions Index (TCI) for November 2014 rose 0.45 over October – a sign of temporary relief as fuel prices dropped dramatically, according to trucking analysts at FTR.
The November TCI reading was 8.98, compared to 8.53 in October.
The benefits will last as long as prices are moving down, FTR said. Strong freight volumes from a good Christmas shopping season are also helping.
FTR expects the index to remain in a ‘normal’ range for a tight trucking market throughout 2015, with readings in the 8-9 point range. Trucking capacity will increase somewhat in 2015 as truck utilization falls under the influence of the 34-hour restart provision suspension.
“With a new year comes new issues to deal with, but the old ones haven’t gone away. Or have they?” said Jonathan Starks, FTR’s director of transportation analysis. “Diesel fuel prices have dropped nearly 20% over the last year, and nearly all of that drop has occurred over the last six months.”
He said December brought welcome relief, as the congressional budget bill removed one of the restrictions keeping driver productivity down. “Finally, an economic recovery that couldn’t seem to gain any traction rebounded in the second quarter and then accelerated in the third quarter, hitting 5% in Q3 – a level not achieved since 2003, and the strongest two quarters of growth this recovery.”
According to Starks, “The drop in diesel prices is a dramatic change in the operating environment for carriers after a four year span in which fuel prices were nearly stagnant. This drop is the single biggest contributor to November’s improvement in the TCI and is expected to continue to push the TCI higher when the December results are in. Conversely, carriers will take a hit to margins when fuel costs inevitably rise. It remains to be seen if the drop in fuel costs will benefit rate negotiations in early 2015.”
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