A measure of trucking market conditions has jumped to its highest level in a decade as many U.S. regions rush to reopen the economy, but without the availability of a coronavirus vaccine, that recovery may be vulnerable to backsliding if Congress does not pass a second stimulus bill, transportation industry analysis group FTR Transportation Intelligence said today.
FTR’s Trucking Conditions Index (TCI) reading of 11.35 for June is the highest in a decade, coming just two months after sinking to a record-low April reading of -28.66, the Bloomington, Indiana-based firm said in the August issue of FTR’s Trucking Update. The TCI tracks changes in five conditions of the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel price, and financing. It combines those individual metrics into a single index number, where a positive score shows good conditions and a negative score shows bad times.
“The reversal of fortune in trucking has been staggering but fairly simple to understand. Freight demand came roaring back in June after the contraction in March and April, but capacity has barely moved,” Avery Vise, FTR’s vice president of trucking, said in a release. “We remain concerned that Washington’s financial support subsidized the economic rebound significantly and that continued strong support might be necessary until a vaccine is widely available. However, even putting that issue aside, we anticipate some stabilization as an inventory rebuild probably accounts for some of the recent demand growth. Also, we see some indications that carriers are beginning to restore driver capacity, at least modestly.”
The report was released the same day that another transportation analysis firm reached similar conclusions, according to Portland, Oregon-based DAT Freight & Analytics, which operates an online marketplace for spot truckload freight.
Most years have a freight slowdown in July, DAT said, but shippers in 2020 are using the spot market to resolve imbalances in their freight networks, as they hurry to restock inventories and meet demand from states reopening their economies. Under that pressure, DAT’s “Truckload Volume Index” for July increased 2.1% over June and was 3.7% higher than July 2019, the firm said. The index is a measure of dry van, refrigerated, and flatbed loads moved by truckload carriers.
“States are reopening at different rates and are being hit by the virus at different times. This is leading to unseasonal peaks and valleys in manufacturing output and consumer demand,” Ken Adamo, chief of analytics at DAT, said in a release. “Carrier networks are out of balance due to inconsistent freight demand at a commodity and lane level, and this is leading to a spike in demand for spot freight in order to meet the capacity need.”
Looking forward, the trucking sector rebound will be dependent on a renewal of federal stimulus efforts, which fuel the consumer spending that constitutes close to 70% of the U.S. economy, he said. “The entire supply chain is being forced to adapt to changes in consumer buying patterns, which affects everything from the equipment types needed for delivery to warehousing capacity,” Adamo said. “Increased online shopping is here to stay and shippers and carriers alike are being forced to adjust.”