FTR and Cass data indicate current trucking market conditions are as good as it gets

If you are in the trucking business, things are going pretty well of late, it seems, right?

A few key monthly reports issued this week-FTR’s Trucking Conditions Index (TCI), and the Cass Freight Index-indicate that the answer to that question is a resounding “YES” and truly drive home that there may be, at the moment, not a better time for the trucking industry.

And that comes with good reason, too, especially when considering some of the key ongoing themes in the sector, including: tight capacity, pricing power, and stable (if not growing) demand, among others.

FTR was direct in its TCI report, explaining that this is an environment for the trucking market that’s never been better. Just how strong of an environment is exemplified with its February reading, the most recent month for which data is available, of 154.1, which marks the strongest TCI reading ever in the report’s history going back to 1992.

This is 4% higher than January and has more room to run through at least the second quarter, should the economy kick into a higher gear. What’s more, FTR explained that while the first quarter is typically “a soft period for freight growth,” that is not the case in 2018.

Looking ahead, the freight transportation consultancy explained that its Truck Loading Index, which it describes as a major cog of the TCI is expected to head up 4%-6% into next year, coupled with rate stabilization and labor-equipment costs that tend to decrease margins for carriers could moderate the TCI over the second half of 2018.

FTR COOJonathan Starkssaid that there is a feeling of optimism, or letting the good times roll, among carriers, which is supported by the TCI’s data.

“We are approaching record level spot rates, freight demand remains elevated, and the economy continues to grow at a good pace,” he said in a statement. “If there is any frustration, it is having to turn away loads due to a shortage of drivers. We have had record levels of trucks and trailers ordered in the first quarter of 2018 and, as that equipment is delivered, we may see some of the capacity pressures relieved. More likely is that freight demand will gradually slow over the course of the year. This can be a challenging time for carriers as they try to balance the short-term and long-term needs of the business. This freight environment won’t stay around forever, and both carriers and shippers will be striving to balance those competing requirements.”

Starks is right in that the current market conditions are not going to last forever, but that, by no stretch, changes the working thesis that things are going really, really well.

And that is clearly confirmed by the March edition of the Cass Freight Index, which saw very strong annual gains for freight shipments and expenditures and minimal sequential movement.

As has been noted before in this space, many freight transportation and logistics executives and analysts consider the Cass Freight Index to be the most accurate barometer of freight volumes and market conditions, with many analysts noting that the Cass Freight Index sometimes leads theAmerican Trucking Associations (ATA)tonnage index at turning points, which lends to the value of the Cass Freight Index.

Looking at the data, the report found that March shipments, at 1.209, rose 11.9% annually and 0.9% over February, with expenditures up 15.6% annually and flat compared to February. Those annual comparisons are beyond healthy and, like FTR’s data, point to a very strong market.

“运输和支出exten索引ded their run into positive territory, and are displaying accelerating strength on top of increasingly difficult comparison,” wrote the report’s author Donald Broughton, principal of Broughton Capital. “In fact, volume has continued to grow at such a pace that capacity in most modes has become extraordinarily tight. In turn, pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy; however fear of long-term inflationary pressure is moderate given technology provides multiple ways to increase asset utilization and price discovery in all parts of the economy, especially in transportation. Shipments first turned positive eighteen months ago, while expenditures turned positive fifteen months ago.”

Broughton added that the current level of volume and pricing growth is signaling that the U.S. economy is not only growing, but that level of growth is expanding, noting that the 11.9% for shipments confirms that the strength in the U.S. economy continues to accelerate.

从这些很强的水平larg东西去哪里ely remains to be seen, but it is clear that market conditions identified by FTR and Cass, coupled with strong economic fundamentals, paints a very bright picture.

Will that picture be bright forever? History and logic indicates the short answer is “no,” making now the time for carriers to be in the moment and see where the road takes things from here.