FTR’s Trucking Conditions Index (TCI) measure for December rose more than two points to a reading of 10.88. FTR’s forecast is that 2016 will be a year of placid conditions for trucking companies, with little or no change in the current trend of tight, but adequate, capacity. Two events could impact capacity utilization and possibly, temporarily, raise rates: if the FMCSA reinstates the Hours of Service changes, and if weather shocks to truck productivity turn out to be greater than currently anticipated. FTR’s forecast for truck loadings growth stands at 3% for the full year reflecting strong freight multipliers unusual this late in a recovery. The recent GDP data highlights the potential that they won’t continue. Any fall in these multipliers remains the major downside exposure.
Jonathan Starks, Chief Operating Officer at FTR, comments, “The trucking environment is still quite healthy. There is no doubt that growth has slowed for certain segments, and there are increasing uncertainties surrounding growth prospects for the U.S. economy. However, contract rates are still rising, albeit slowly, and there is very little capacity that is exiting the system. You can see this in the Truck Failures figures that are reported by Avondale Partners as they sat near historic lows throughout 2015. Falling fuel is clearly helping cash flow for small carriers, but declining spot market rates are negating some of that improvement. Overall, the trucking industry seems to be in a relatively stable environment as we move into 2016.”