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Home » Monthly truck-conditions index fell in March to lowest point since '11, firm says
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Monthly truck-conditions index fell in March to lowest point since '11, firm says

May 16, 2016
DC Velocity Staff
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Transport consultancy FTR Associates said today that its monthly index of trucking conditions plummeted in March by nearly half from February levels, to stand at its lowest point in five years.

The drop in the index was due, unsurprisingly, to weak truckload demand, which has created oversupply and blunted any attempt by carriers to raise rates, FTR said. What's more, further declines in the index are possible over the near to medium term, with no tangible upward movement until late in the year, FTR said.

Jonathan Starks, FTR's chief operating officer, said in a statement that, on a seasonally adjusted basis, March volumes were lower than July 2015 levels. "The market has essentially moved sideways for more than half a year," Starks said.

Starks said he was surprised by the "sharply negative environment" for pricing on a contractual basis, even as the spot, or non-contract, market appears to have stabilized after a very weak 2015. The direction of spot-market rates usually foretells trends in the contract market, despite the fact that spot traffic accounts for just 25 to 30 percent of overall truckload volumes.

Although weak pricing will continue for a while, it should improve from current levels, Starks said. Rates will show tangible improvement in 2017, as federal government mandates such as the requirement to equip all truck fleets with electronic logging devices by year-end 2017 begin to bite at capacity levels, Starks said.

Various experts have predicted a 3- to 5-percent cut in nationwide fleet productivity. The reduction will occur as truckers exit the market because of their inability or unwillingness to absorb higher costs and increased operational disruptions associated with the move from paper logs to digital readers.

While the current environment for truckers is difficult, it pales compared to late 2008, when the global financial crisis and recession put the U.S. economy and the trucking industry in a near deep freeze. The index's lowest recorded number came in late 2008 at a negative 16.1, Starks said. March's rating was 4.4.

Transportation Trucking Truckload
KEYWORDS FTR
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