FTR’s Trucking Conditions Index (TCI) for July received a bounce to a reading of 5.99, reflecting improved market prospects due to moderate economic growth and a regulatory agenda that will tighten capacity utilization. Building regulatory drag over the next 18 months should increase pricing and margins for fleets that have capacity. TCI readings for the balance of this year and into early 2017 should remain near the current level.
Jonathan Starks, Chief Operating Officer at FTR, comments, “The freight market is doing slightly better than just treading water, but there is still a disconnect between activity in the spot and contract markets. This is a result of the slow growth environment that we are in right now. You use your contract carriers whenever you can. There just hasn’t been enough extra freight to spill over into the spot markets. Plus, shippers were able to use the big drops in spot rates to help put pressure on on their contract carriers. I believe that those conditions will soon be turning, especially for van freight. Van loads on the load boards are up this summer, and capacity has noticeably tightened. It isn’t extremely tight, but compared to last year it is a welcome relief for carriers. That should soon take root in contract rates, especially as shippers and carriers prepare for their 2017 negotiations. One note of caution is in the flatbed segment. The big reductions in oilfield activity has continued to put too much carrier capacity back into the spot market, and pricing is still weak for this segment. Until oil prices move higher or housing and business investment rally, the long-haul flatbed market is going to continue to struggle for volumes and rates.”