BLOOMINGTON, IN. — You can expect modest rate increases soon, FTR said today.

FTR’s Trucking Conditions Index (TCI) for April is showing a ” strongly favorable environment for trucking,” and sitting at 13.8. A reading above 10 means good news for volumes, prices and margins.

Those modest rate increases are expected to be driven by volume growth as well as reduced trucking productivity resulting from new and more stringent regulations. The new regs are forecasted to take a 3 percent bite out of trucking capacity.

Why only a modest increase in rates? FTR said a soft fuel market will keep overall rate increases below normal recovery levels. At the same time, they do expect a sizable increase in base prices “due to the effects of Hours of Service and other rulings negatively impacting trucking capacity.”

Manufacturing may be a problem, however. “Recent data point to a fragile manufacturing sector,” noted Jonathan Starks, director of transportation analysis for FTR. “This is a concern as industrial movements account for a significant portion of truck freight.” But, he said, he believes that manufacturing is pausing rather than going into a downturn.

“As long as the modest economic growth continues, trucking should be able to show further growth in 2013. The bigger concern is how the industry reacts to the fast approaching Hours of Service start on July 1. The markets have been in supply and demand equilibrium since late in 2011. As such, rates have been very stagnant amid a strong TCI reading because the market tends to react to changes in market conditions,” Starks explained. “We believe that our expected 3 percent hit to productivity is enough to break that equilibrium and generate substantial rate improvement by the end of the year.”