FTR’s Trucking Conditions Index (TCI) deteriorated in September to a minus 2.35 reading from a near-neutral minus 0.25 in August.
Weaker freight rates and an end to the sharp drop in diesel prices were the key factors in the change relative to August, although those negatives were partially offset by stronger freight demand and capacity utilization, FTR reported. Overall, the largest negative contributor to the September TCI was the cost of capital as the Federal Reserve battles inflation with higher interest rates. However, financing costs were only a slightly more negative factor in September than they were in August.
“After 18 months of mostly double-digit TCI readings, the index has been negative in all but one month since February,” said Avery Vise, FTR’s vice president of trucking. “We expect market conditions to remain mildly negative for carriers in most months at least through 2023, but that weakness likely will not mirror the strength seen in late 2020 through early 2022. Trucking companies that managed their businesses well during the good times should remain healthy and outperform those that had relied on a robust market to remain afloat.”
Details of the September TCI are found in the November issue of FTR’s Trucking Update. The November edition also includes an exploration of why the creation of new trucking companies remains stronger than would be expected given the large numbers of carriers exiting the market.
The TCI tracks the changes representing five major conditions in the U.S. truck market: Freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. The individual metrics are combined into a single index indicating the industry’s overall health. A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. Readings near zero are consistent with a neutral operating environment, and double-digit readings in either direction suggest significant operating changes are likely.