REPORT: “Strengthening Freight Demand” Mostly Offset by “Weak Truckload Rates”
Bloomington, IN – A new report indicates conditions for carriers significantly improved in June though “weak truckload rates” continue to hamper the overall operating environment.
According to trucking industry analyst, FTR Transportation Intelligence, its Trucking Conditions Index (TCI) for June remained slightly in negative territory at a reading of -0.82, but improved from May’s reading of -2.3.
June’s modest bounce back was the first improvement in the TCI in three months.
FTR attributed the improving conditions to “strengthening freight demand and lower diesel prices.”
However, the report also indicated those improvements were mostly offset by “weak truckload rates and easing capacity utilization plus some higher financing costs.”
FTR’s forecast for the TCI is for it to remain in low single-digit negative range into 2020, but some positive readings are possible during 2019.
Commenting on the newest TCI report was Avery Vise, FTR’s vice president of trucking.
He said, “Although rates remain weak for carriers, they appear at least to be stabilizing. Meanwhile, freight demand appears firmer in recent weeks than in early spring, but the outlook is far from rosy given a softening industrial sector.”
Vice also expressed “near-term concern” about the “potential impact of the trade war with China on consumer spending and business investment.”
Earlier this month FTR released its latest freight volume forecast.
Eric Starks, FTR’s chairman and CEO, commented, “It’s a slow growth environment now, but it feels worse than that because the freight markets were so extraordinarily hot in 2018.”
Like Vice, Starks also reiterated fears of a trade war with China.
“While freight volumes are holding up as of now, most of the risks seem to be on the downside, especially with tariffs and the overall trade climate,” he said.
Starks described “mixed signals” in the economy that are further clouding the future outlook.
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.
Read more of TNN’s coverage on FTR’s most recent freight forecast report HERE.
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