FTR Associates' Trucking Conditions Index (TCI) for June at 6.46 reflects a significantly revised index which now includes a factor for truckload pricing and an update to historical data. A full explanation of these changes and the details of the June TCI Index are found in the August issue of the Trucking Update published August 1. As compared to the previous month’s revised index, June improved more than 30%.
Active truck utilization is moving up as the effects of Hours of Service regulations kick in. FTR forecasts a 3% productivity reduction from HOS but expects an even more significant hit to productivity with a collection of smaller regulatory rules that will affect the industry between 2014 and 2016. 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.
Jonathan Starks, Director of Transportation Analysis for FTR, comments, "This month marks a large update to our Trucking Conditions Index. As the industry has struggled to implement reasonable price increases despite a high level of truck utilization, our index has incorporated a more complete picture of the carrier’s operating environment. This has led to a lowering of the index but we still feel that carriers are operating in a positive environment. The onset of HOS changes is expected to tighten capacity further and should lead to a more robust rate environment as we move through the fall shipping season. The major factors in our anticipation of continued elevated levels in the index are capacity and rates. If volumes were to see an unexpected burst of activity this fall, it could be a decisive factor in moving the index to a level that would indicate more rapid acceleration in freight rates and margins. Those are important elements as costs have generally outgrown rate increases over the last year."
The Trucking Update, published monthly, is part of FTR's Freight Focus Series and reports data that directly impacts the activity and profitability of truck fleets. As part of the Trucking Update, FTR forecasts expected trends in this data and the probable short and long term consequences.