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Home » Trucking index jumped again in February; higher freight rates seemingly on way
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Trucking index jumped again in February; higher freight rates seemingly on way

April 11, 2013
DC Velocity Staff
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A monthly index of economic conditions in the trucking industry continued its upward move in February, rising more than two points from January's levels to 12.9 percent, according to FTR Associates, a transportation consulting firm that publishes the index.

The index, a combination of multiple data points that measures real-time and future industry conditions, is now in a range that reflects a solidly favorable environment for truckers, according to Bloomington, Ill.-based FTR. Any reading above 10 indicates increasing volumes, prices, and margins, according to the index.

Freight rates have remained steady but have shown little increase since 2012, despite the more favorable economic climate for truckers, FTR said. However, that will change in the second half of the year as the federal government begins its scheduled July 1 enforcement of the new rules governing a driver's hours of service.

The rules, which industry groups have challenged in court, are expected to result in a tightening of capacity as fewer trucks and drivers operate on the nation's highways. If upheld, the rules are expected to shave anywhere from 3 to 7 percent off truck capacity. This reduction will come at a time when qualified drivers are not easy to find, truckers are replacing but not adding rigs to their fleets, and freight demand may finally be growing in a sustainable way.

Shippers and truckers have sued the Federal Motor Carrier Safety Administration (FMCSA), the sub-agency of the Department of Transportation implementing the rules. The groups argue that the regulations in effect for several years effectively balance safety and commercial needs and that the new rules will disrupt established supply chains and actually jeopardize safety.

The impact of the new rules, combined with the continued pickup in demand, will allow truckers to push up freight rates. FTR, for its part, believes enforcement will begin July 1 as planned.

"Industry capacity and demand for truck freight services are currently very close to equilibrium," said Jonathan Starks, the firm's director of transportation analysis. "It will not take much to move the needle to a supply shortage that should benefit truckers."

The index's upward movement is expected to peak during the summer, FTR said. However, it should remain strongly positive for some time, the firm added.

Transportation Trucking
KEYWORDS FTR
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