FTR’s Trucking Conditions Index (TCI) for November, at a reading of 8.98, reflects temporary relief as fuel prices drop dramatically. The benefits will last as long as prices are moving down. Strong freight volumes from a good Christmas shopping season are also helping. FTR expects the index to remain in a 'normal' range for a tight trucking market throughout 2015, with readings in the 8 to 9 point range. Trucking capacity will increase somewhat in 2015 as truck utilization falls under the influence of the 34-hour restart provision suspension.
Details of the November TCI are found in the January issue of FTR’s Trucking Update, published December 23, 2014. The ‘Notes by the Dashboard Light’ commentary looks at how long the current economic recovery is expected to last. Bonus commentary is included in the January issue covering the likely effects of the 34-hour restart provision suspension. Along with the TCI and ‘Notes by the Dashboard Light,’ the Trucking Update includes data and analysis on load volumes, the capacity environment, rates, costs and the truck driver situation.
Jonathan Starks, FTR’s Director of Transportation Analysis, comments, "With a new year comes new issues to deal with, but the old ones haven't gone away. Or have they? Diesel fuel prices have dropped nearly 20% over the last year, and nearly all of that drop has occurred over the last six months. After a year that started with severe weather, which kept truck capacity limited until summer, December brought welcome relief as the congressional budget bill removed one of the restrictions keeping driver productivity down. Finally, an economic recovery that couldn't seem to gain any traction rebounded in the second quarter and then accelerated in the third quarter, hitting 5% in Q3 - a level not achieved since 2003, and the strongest two quarters of growth this recovery.
“The drop in diesel prices is a dramatic change in the operating environment for carriers after a four year span in which fuel prices were nearly stagnant. This drop is the single biggest contributor to November's improvement in the TCI and is expected to continue to push the TCI higher when the December results are in. Conversely, carriers will take a hit to margins when fuel costs inevitably rise. It remains to be seen if the drop in fuel costs will benefit rate negotiations in early 2015."
