Truckload demand remains in a funk, April measures show

Business conditions for the trucking industry improved slightly in April but the overall condition of the sector continues to drop steadily from its precipitous highs of 2018, according to the freight industry tracking firm FTR.

Bloomington, Ind.-based FTR's Trucking Conditions Index (TCI) had dropped into negative territory in March for the first time in "several years" and the April bump did little to change that, ending up at -0.64. FTR expects that the index will remain in a narrow band of negative readings through 2019 and into the 2020 calendar year, the freight transportation forecasting and consulting firm said.

FTR's index tracks the changes representing five major conditions in the U.S. truck market—freight volumes, freight rates, fleet capacity, fuel price, and financing—and combines those metrics into a single measure. Positive numbers mean strong conditions for carriers—and high freight prices for shippers—while a zero reading indicates that truck supply and demand are roughly in balance.

Last year was a bumper crop for truckers, with tight capacity conditions pushing the TCI to a sky-high 15.41 in February 2018, but it has been plummeting ever since."Not that long ago, it seemed inconceivable that the good times in trucking would end, but here we are back down to Earth," Avery Vise, FTR's vice president of trucking, said in a release. "Growth in manufacturing - the most significant driver of trucking activity - has subsided, and residential construction remains stagnant. However, there are some near-term positives, such as lower diesel prices. Also, carriers are responding to flagging demand by ending their hiring spree, which could set the stage for firmer capacity utilization down the road."

The slump in FTR's index mirrored another measure of the trucking sector, as truckload freight marketplace operator DAT Solutions reported that spot truckload freight volumes failed to meet expectations in May.

The number of full-truckload van loads—which haul approximately 70 percent of all truckload freight moved on the spot market—declined 12 percent in May compared to April, according to the Portland, Ore.-based firm. The DAT Truckload Volume Index also showed that van load counts were down 10 percent compared to the same period a year ago (May 2018).

Possible culprits for the soft market include uncertainty over trade agreements and slumping imports from China, in addition to record rainfalls, flooding, and tornadoes hampering freight movements in many parts of the country, DAT said.

"Simply put, May was a disappointment in terms of load counts," DAT Senior Industry Analyst Mark Montague said in a release. "We're accustomed to seeing higher volumes of retail goods, fresh produce, construction materials, and other seasonal spot truckload freight moving through supply chains at this time of year."

Burdened by those conditions, spot truckload rates continued to track well below last year's record levels, the firm found. Compared to April, the national average spot van rate was virtually unchanged at $1.80 per mile (including a fuel surcharge), making it 35 cents below the average for May 2018. The average reefer rate was $2.15 per mile, 1 cent higher than April and 38 cents lower than May 2018. The flatbed rate averaged $2.27 per mile, down 5 cents compared to April and 45 cents lower year over year.

"After a lackluster May, June is shaping up to be a pivotal month for trucking," Montague said. "We will know soon whether the volumes we expected in May were simply delayed. If so, the pent-up demand could boost seasonal volumes at the close of Q2."

Uncertainty over trade agreements and slumping imports from China seemed to dampen truckload demand in May. https://t.co/FQgIclVMVb

— DAT Solutions ???????? (@LoadBoards) June 12, 2019