Increased Costs Could Mean Less Favorable Trucking Conditions
Source: FTR
">Source: FTR
">FTR's Trucking Conditions Index fell by more than two points in June as a result of increased costs for labor, fuel, and equipment, reflecting less favorable conditions for trucking.
The June TCI dropped to a reading of 4.54 for the month. Market tightness is seen as likely shorter than expected due to a possible drag on capacity caused by upcoming regulations, according to FTR.
“Despite the monthly drop from May to June, the TCI has stayed in a relatively stable range since this time last year,” said Jonathan Starks, FTR's COO. “It remains positive, but does not yet indicate that a significant change in operations is occurring.”
FTR is maintaining a favorable freight forecast for the rest of the year, but does not expect as strong of a result for 2018. It is projecting around half of the growth for next year with an increased risk of recession toward the end of 2018.
“The potential for such a change increases as we move through 2018, with ELD implementation and continued freight growth hindering truck capacity,” said Starks. “We are also beginning to hear stories of increased difficulty in hiring as the economy begins approaching full employment.”
The spot market has shown strong increases in recent weeks it could be an indicator as to how rates in the contract market are likely to move, according to Starks.
“Spot data in early August shows that the rate increases have hit the double-digit mark and are still moving up,” said Starks. “Market participants need to continue evaluating conditions ahead of the ELD implementation in December to make sure that they are prepared for the possible disruptions that could occur.”
Related: Controlling Creeping Fleet Costs
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