Trucking market conditions fall to all-time low marks as health crisis bites freight sector

A measure of trucking market conditions has sunk to its lowest point on record due to lockdowns related to the Covid-19 pandemic, and statistics are not expected to turn around until the middle of 2021, transportation industry analysis group FTR Transportation Intelligence said today.

The Bloomington, Indiana-based firm reported that its Trucking Conditions Index (TCI) hit a reading of -8.69 for March, saying that is just the start of negative readings that almost certainly will lead to the worst quarter (Q2 2020) for the segment on record. “FTR expects by far the worst monthly reading in April before readings recover to still-negative conditions. We do not anticipate any positive TCI readings until around the middle of 2021, although the pace of economic recovery remains uncertain,” the firm said in its report.

The TCI tracks changes in five major conditions in the U.S. truck market, including: freight volumes, freight rates, fleet capacity, fuel price, and financing. FTR combines those metrics into a single index indicating the industry's overall health, with a positive score representing good, optimistic conditions and a negative score showing the opposite.

“Despite a brief grocery restocking surge, overall trucking market conditions in March were the worst since the Great Recession. However, once we have all the data for April, March will seem like the good ol’ days by comparison,” Avery Vise, FTR’s vice president of trucking, said in a release. “Trucking conditions certainly will improve beyond April, but the outlook remains uncertain both in demand and capacity as consumers, businesses, and trucking companies navigate an unprecedented contraction-and-restart dynamic that is further complicated by an ongoing health crisis and enormous financial support from Washington.”

In another measure of trucking market weakness, the Columbus, Indiana-based market analysis firm ACT Research Co. said that April net U.S. trailer orders were a mere 209 units, marking a plunge of 97% month-over-month and 99% below the previous year. The firm’s “State of the Industry: U.S. Trailer Report” provides a monthly review of the current U.S. trailer market statistics, as well as trailer OEM build plans and market indicators, presented for all major trailer types.

“It is difficult to comprehend a report of 209 net total trailer orders in April. By far the weakest monthly net order volume in industry history, April was disturbingly close to a net negative order month, and even new order volume of just under 6,000 trailers was the fourth worst month since 1990,” Frank Maly, Director–CV Transportation Analysis and Research at ACT Research, said in a release.

“Several discussions regarding April included comments indicating that the shift in fleet investment plans was abrupt, and more concerning were the comments that fleet confidence continued to worsen in May, with recent descriptions depicting the market as the worst ever experienced,” May said. “The surge in freight volumes that came from critical goods movement and what could easily be termed consumer ‘panic buying’ is done, and fleets perceive that shift. Large fleets remain on the sidelines, and financial pressures will likely push many small and medium fleets entirely off the playing field, leaving some very challenging months ahead.”

In yet another measure of bad news for the freight sector, the American Trucking Associations (ATA) said its advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index contracted 12.2% in April after increasing 0.4% in March. In April, the index equaled 104.9 (2015=100) compared with 119.5 in March.

“April’s monthly decline was the largest in 26 years when there was a labor strike in April 1994,” ATA Chief Economist Bob Costello said in a release. “Considering that April factory output and retail sales plummeted, the large drop in truck freight is not surprising. However, not all fleets saw large declines in April. Those hauling food for grocery stores and those involved in the on-line retail supply chain outperformed most other fleets. Some fleets witnessed very large declines in freight last month.”  

March’s gain was revised down to 0.4% from the 1.2% increase originally reported.

“These historic declines show just how much trucking was impacted by our national response to the Covid-19 pandemic” Costello said. “As the nation starts taking small steps toward reopening, we should see some modest improvements in the freight market, but the size of April’s decline gives us an idea of how long the road back may be.”

ACT Research: U.S. Trailer Net Orders Dropped 97% Sequentially in April, -99% Y/Yhttps://t.co/jLk8vilQzZ

— ACT Research (@actresearch) May 21, 2020