FTR: Tight Capacity, Rate Increases Projected to Continue
FTR’s Market Demand Index hit a record high the first week of 2018.
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Truckload capacity will remain tight and rates high, but both may moderate somewhat as market forces come into play, according to FTR analysts. The ELD mandate is still a wild card, with the economy and tax reform playing a part as well.
FTR’s Market Demand Index, which measures how many available trucks there are vs. how many loads on the spot market, really accelerated once we got past the first quarter of 2017 after a somewhat depressed 2016, explained FTR Chief Operating Officer Jonathan Starks in a recent webinar.
A spike occurred after Hurricanes Harvey and Irma, and again right at the end of the year. In the first week of 2018, it hit record levels. In fact, Starks said, “We hit record levels in four of the last 15 weeks of this index.”
Rates showed a similar pattern, coming down a bit in the first week of the year but still “very elevated,” Starks said. Although they are expected to come down some, FTR still sees a very strong spot freight market going forward.
“I think there’s perhaps no more striking indicator of what’s happening in trucking than what’s happening in rates,” noted Avery Vise, FTR’s new vice president of trucking research. “The spot market began to turn about a year ago and has soared since.” As is typical, he added contract rates becan to move higher as well, albeit on a delayed basis.
“A robust spot market will continue to translate into higher contract rates as carriers and shippers adjust to a new normal,” Vise said. FTR projects that through 2018, spot market rates will continue to grow, but not as fast as during 2017. Likewise, contract rates should accelerate through 2018 before tapering off.
Vise emphasized that while …Read the rest of this story
