REPORT: Trucking Conditions Getting Worse, But “Stability” Is On The Horizon

Bloomington, Indiana – Conditions for trucking companies worsened in May for the third consecutive month but “stability” could be on the horizon, according to a new report by trucking industry analyst, FTR.

FTR’s Trucking Conditions Index (TCI) fell back nearly two points in May to a new reading of -2.3.

Trucking conditions worsened for the third consecutive month in May falling nearly 2 points, according to FTR’s Trucking Condition Index.

The TCI has been in negative territory since March and FTR says the worsening negative reading reflects a “general weakness” in conditions affecting carriers.

FTR analysts say the primary cause worsening conditions for trucking companies is the “softening rate environment.”

 

Freight demand was the only positive contributor in the May measure, albeit not a particularly strong one, FTR noted in its report.

However, FTR’s predicted outlook is for relative stability through the year and even possibly some slightly positive readings at some point.

Avery Vise, vice president of trucking, commented, “Although we have dropped from double-digit TCI readings to negative readings in less than a year, we believe the outlook for the rest of 2019 generally is for stability close to neutral conditions.”

Vise said it is also important to recognize that most of the weakness is in the industrial sector.

He noted, “Trucking activity related to consumer demand should be relatively stronger than the rest of the industry.”


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Freight Recession Has Arrived Due To “Significant Overcapacity”

A freight recession has officially arrived according to a new report by trucking industry analyst ACT Research.

In its July installment of the ACT Freight Forecast, ACT Research maintained its view that truckload and intermodal contract rates will fall this year due to overcapacity and weak freight demand.

 

Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, the latest data paints a picture of “bad news” in the short-term, but “good news” in the longer term.

“The bad news is we’re in a freight recession and the factors we focus on tell us spot rates are headed still lower near-term, but that’s been going on for a while,” Denoyer said.

“The good news is that for the first time this cycle, we see evidence on the horizon for an eventual bottoming and upturn in spot truckload rates, thanks to low new truck orders and improving capital discipline from the trucking industry,” he analyzed.

A big part of the problem, Denoyer said, is “significant overcapacity” in the truckload market.

Denoyer said ACT analysts expect the supply side to begin to improve later in this year as the decline in U.S. Class 8 tractor build rates continue.

Until then, Denoyer said shippers will continue to have the upper hand in rate negotiations.

Read more recent trucking business news HERE.

 

About FTR’s TCI

The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fuel price, and financing.

 


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