Trucking Conditions Rebound, Best This Year

BLOOMINGTON, IN — While business conditions in Canada are shaky, the situation in the U.S. for the trucking industry is the best so far this year, according to the freight transportation forecasting firm FTR

Its just released Trucking Conditions Index (TCI) measure for June rose from May, jumping 56% to 7.66, hitting the highest level of 2015.

While freight growth slowed during the second quarter of the year, FTR said rates continue to show growth and margins are still good. Also, freight growth is on track for the sixth straight year of annual gains.

It expects regulatory conditions and a continued economic recovery to fuel an accelerating index during 2016.

Drops in fuel costs continue to be a positive for everyone involved – truckers, shippers, and consumers – said FTR, however, labor costs have shown substantial increases, which is keeping up the pressure for rising rates.

“May was the lowest level in three years, but June was the best month so far in 2015,” said Jonathan Starks, FTR’s director of transportation analysis. “Continued declines in fuel prices during July and August should help to keep the index elevated as the industry prepares for the fall shipping season.”

According to Starks, the fall peak may not be as strong this year but the economy continues to chug along, and contract rates are still growing versus last year.

“The spot market has certainly slowed in 2015, relative to a very robust year in 2014. For the last week of July, the Market Demand Index (MDI) from was down over 50% from 2014,” he said. “Spot rates are also down, but not nearly as dramatically, and half of the decline stems solely from lower fuel prices. The truck market is quite stable at the moment and seems likely to maintain that pace until we get into 2016.”

FTR noted if fuel prices jump during 2016, just as capacity is tightening, it could cause a significant acceleration in rates.

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