Strong trucking environment gets stronger in April: FTR Index

by Canadian Shipper

BLOOMINGTON, Ont. — A strong environment for trucking got even stronger in April, as FTR’s Trucking Conditions Index (TCI) rose another 0.7 points to a reading of 13.8. 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, as they are now, signal that volumes, prices, and margins are likely to be in a solidly favourable range for trucking companies.  

FTR officials say modest rate increases are expected to resume as freight enjoys reasonable volume growth alongside the reduced trucking productivity due to increased regulations (It is forecast that new regulations will take at least 3% out of trucking capacity, according to FTR). A soft fuel market will keep overall freight rate increases (rates including fuel) below normal recovery levels, the report says. However, FTR expects a significant increase in base prices due to the effects of Hours-of-Service and other rulings negatively impacting trucking capacity.  

“Recent data point to a fragile manufacturing sector. This is a concern as industrial movements account for a significant portion of truck freight. Despite the concern I believe that manufacturing is pausing rather than starting a downturn. As long as the modest economic growth continues, trucking should be able to show further growth in 2013,” said Jonathan Starks, director of transportation analysis for FTR.

“The bigger concern is how the industry reacts to the fast approaching Hours-of-Service starting 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. We believe that our expected 3% hit to productivity is enough to break that equilibrium and generate substantial rate improvement by the end of the year.”

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