FTR’s Trucking Conditions Index (TCI) for March fell back to a reading of 2.97 after an upturn in February.
However, as detailed in the May issue of the Trucking Update, FTR sees the recent steady improvement in spot rates as an indication that a market-wide move to capacity tightness is on the way with a correlating upswing in the index throughout 2017 and into 2018.
FTR remains confident in the freight market for 2017, as we started the year off with strong growth in Q1. Their forecast has moderated somewhat for the regulatory headwinds affecting trucking, but still expect them to have significant effect toward the end of 2017 and for most of 2018.
Jonathan Starks, Chief Operating Officer at FTR, said: “The TCI has settled into a positive, but not robust, level of market conditions over the last 12 months. The main reasons for the reduction in the March TCI stems from slightly weaker freight activity, reduced estimates of capacity tightness, and continued weaker-than-expected conditions for contract rates. Trucking conditions are likely to stay in this moderate range until late this year when the Electronic Logging Device (ELD) mandate comes into effect. Once you combine the productivity hit coming from full implementation of ELDs with continued freight growth and the capacity reductions that have already occurred, you get a market that is poised to see significant movement in rates.
“Recent spot market activity shows that some of these trends are already underway. Truckstop.com’s Market Demand Index (MDI), a measure of tightness in the freight-matching sector, is up nearly 100% compared to this time last year, and prices are now showing 5% y/y gains--enough of a move to convince us that the market is continuing to turn in a carrier direction.”