July Trucking Conditions Index skyrockets
FTR’s Trucking Conditions Index (TCI) reading of 8.41 in July, jumping 30 percent over the previous month’s reading.
The up-tick reflects the indexes forward look at an expected pricing uptick for truckers this fall as capacity tightens with regulatory effects and decent freight demand, FTR says, adding it expects a modest peak in freight growth in the fall of 2013 before demand reverts to the slow growth trend experienced in 2012 and early 2013.
“There still remains very little hard evidence of the impacts from the recent introduction of new Hours-of-Service rules on July 1, but anecdotal accounts and very early data are starting to show some potential impacts,” Jonathan Starks, director of transportation analysis for FTR, says. “Unfortunately, freight demand has remained lackluster with very little movement up or down outside of normal seasonal activity.”
Starks says there is potential for a decent fall peak shipping season as the ISM manufacturing index is strong and inventories remain relatively lean, but the continued slog of the overall economy makes it unlikely that we get the significant push in consumer activity that is needed to really start moving the needle on capacity constraints and upward rate activity.
“Should any decent economic growth occur it should quickly show up in truck activity and tighten a market that has very little spare capacity,” he adds.”The potential for an extremely tight truck market remains but is dependent on those external factors.”
The TCI is designed to summarize a full collection of industry metrics, with a reading above zero indicating a generally positive environment for truckers. Readings above 10 would signal that volumes, prices, and margins are likely to be in a solidly favorable range for trucking companies.