FTR reports slight decline in Trucking Conditions Index, but anticipates rebound

FTR's Trucking Conditions Index for March reached a reading of 7.3, indicating softness in the market due to the end of low fuel prices and lessening of demand, but anticipates a rebound by summer.

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FTR’s Trucking Conditions Index (TCI) for March, at 7.3, reflects a continued softness due to the end of the large drops in fuel costs and a modest lessening of demand for truck services. However, FTR expects conditions affecting trucking companies to rebound by summer as economic growth improves, truck demand stabilizes, and capacity tightens further. Downside risks for freight growth, such as currently weak manufacturing numbers, are being monitored closely by FTR and will be reflected in future TCI forecasts if warranted.

Jonathan Starks, FTR’s Director of Transportation Analysis, comments, "Conditions for truckers and fleets remains quite positive despite the recent dip in the index. This dip followed a very strong increase in the TCI over the last half of 2014 as solid volumes, good rate gains, and falling diesel prices helped propel the December index to its first double-digit reading since early 2010. The recent data on the economy has been mixed with Q1 GDP coming in substantially weaker but sales and employment picking back up to start Q2. This recovery has been unusual in that Q1 GDP has generally been much weaker than the growth seen the rest of the year. This gives us optimism that the truck markets will not be significantly slowed, although it is likely that manufacturing output will be less strong in 2015. This will be especially true for exports of U.S. goods, as the dollar has risen over 20% in the last year and our goods are now more expensive and less competitive in global markets. We are also keeping an eye on sales and inventories data because, so far, the drop in fuel costs has not directly translated into large gains in consumer spending. If consumers save that cash, it will likely mean another year of slow and steady economic growth; however, if production doesn’t slow to follow suit, then we will get an inventory glut that will have to be quickly worked down. If they start spending, it could help fuel another surge in economic growth like we saw last year.”