If forecasts issued today by consultancy FTR prove to be accurate, 2016 will be the year of living placidly for the country's motor carriers. And that's probably a good thing.
FTR's "Trucking Conditions Index" for December rose more than two points, to a reading of 10.88, which the firm said reflects little or no change to the current trend to adequate, albeit somewhat tight, capacity conditions. FTR forecasts a 3-percent increase for 2016 truck loadings, an unusually strong number coming late in an economic recovery cycle. However, recent government data showing that fourth-quarter gross domestic product (GDP) grew at only a 0.7-percent annualized rate raises the chances that the solid loadings number will not continue, FTR said.
FTR said capacity could tighten if weather shocks disrupt fleet utilization and the Federal Motor Carrier Safety Administration (FMCSA), the unit of the Department of Transportation that regulates truck safety, reinstates its controversial "restart" rule requiring drivers with 34 hours off duty in a week to take two consecutive days of rest between 1 a.m. and 5 a.m., and to limit those extended rests to just once a week. Congress suspended the provision until FMCSA demonstrates that it would result in what lawmakers called "statistically significant" improvement in driver health, safety, and performance compared with drivers operating before July 1, 2013, the date the rules took effect.
FTR said that changes in the status quo that tighten capacity could lead to rate increases, but that their effect would be temporary.
Jonathan Starks, FTR's chief operating officer, said in a statement that the climate for trucking is "still quite healthy." Starks noted that contract rates are rising, albeit gradually, and that little capacity is exiting the system. Small carriers are being helped by dramatically lower fuel prices, Starks said. However, declines in noncontractual, or "spot," market rates are offsetting the benefit of lower fuel prices, he added.