Trucking index down on easing of capacity tightness

FTR’s monthly Trucking Conditions Index hit a three-year low in May as hours of service enforcement suspension and other factors loosened up capacity in market.    The transportation analyst FTR’s Trucking Conditions Index (TCI) measure for May dropped 25 percent to a three-year low of 4.91 due to softer capacity, pricing, and fuel prices, the firm said Monday.
   Tight capacity from earlier in 2015 has eased following the partial suspension of the federal hours of service regulations, a suspension due to expire at the end of September. FTR said it expects the Trucking Conditions Index will rise into positive territory as an anticipated drag due to trucking regulations in 2016 and 2017 dramatically tightens capacity.
   “For the overall trucking environment, improvements in productivity and reductions in fuel prices have kept costs in check until now,” FTR said. “However, with the recovery now fully maturing, fuel and other costs, like labor, should increase, putting more pressure on rates in early 2016.”
   “While the market has notably softened, conditions for fleets are still quite positive and indicate how well they are able to manage the current headwinds,” said Jonathan Starks, FTR’s director of transportation analysis. “One significant benefit is that fuel costs have dropped substantially and have yet to significantly rise. A sharp rise in diesel would be very troubling for many of the marginal carriers. Another benefit has been the slow growing freight environment which has allowed fleets to re-engineer their lanes in order to take better advantage of drivers’ hours.
   “While the capacity situation has definitely eased since last year, it is still well above historical levels and should keep contract rates, at minimum, stable with a potential to grow stronger by early 2016,” added Starks. “Overall, the market is stable, and we see that path continuing until we get into 2016, when recession and regulatory risks begin to rise significantly.”