The February reading of FTR’s Trucking Conditions Index, along with steadily increasing orders for Class 8 trucks and trailers, “reflects an environment for carriers that has never been better,” according to the freight transportation analyst.
An extremely tight North American trucking market in early 2018 has created the “best ever” environment for operators, according to freight transportation analyst FTR.
FTR’s Trucking Conditions Index, which aggregates changes in freight volumes, rates, fleet capacity, fuel price and financing in the U.S. truck market, jumped four points from the previous month in February to a reading of 15.41, the highest level since FTR created the index in 1992.
The TCI reading for February “reflects an environment for carriers that has never been better,” the firm said, adding that the increase is that much more noteworthy given that the first quarter is traditionally a “soft period” for freight growth.
“FTR’s Truck Loading Index, which is a major component of the TCI, should see growth of 4 percent to 6 percent year-over-year into 2019,” FTR said, while also warning that “rate stabilization and labor/equipment costs that soften carrier margins could moderate the TCI reading in the second half of the year.”
“For carriers, there is a feeling of ‘let the good times roll,’ and the data is backing that up,” said FTR Chief Operating Officer Jonathan Starks. “We are approaching record-level spot rates, freight demand remains elevated, and the economy continues to grow at a good pace.
“If there is any frustration, it is having to turn away loads due to a shortage of drivers,” he added. “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.”
FTR earlier this month reported that orders for Class 8 trucks and trailers both reached near historic levels in March.
According to preliminary FTR figures, Class 8 truck orders in March surged 15 percent from February and 103 percent from the same month a year ago to reach 46,300 units.
The orders represented the third most of any month on record, again exceeding the firm’s expectations and boosting first-quarter 2018 orders to the highest of any quarter ever, as fleets attempted to add capacity “as fast as possible in a dynamic market,” FTR said.
North American Class 8 orders for the past twelve months now stand at 357,000 units.
“The current capacity crisis may be the worst ever,” said Don Ake, vice president of commercial vehicles at FTR. “Capacity is extremely tight and expected to remain this way for months. Fleets need more trucks to handle huge freight demand and continue to order trucks at record setting rates. OEM 2018 build slots are quickly filling up.
“Freight growth continues to climb at a rapid rate,” he added. “The vibrant economy is pushing dry van and refrigerated van loads to elevated levels and renewed oil drilling is generating a tremendous amount of flatbed freight.”
Trailer orders for March likewise showed strong year-over-year growth despite slipping on a sequential basis. Orders totaled 27,500 units for the month, down 16 percent from February but up 34 percent compared with March 2017.
FTR predicts the growth in trailer order volumes, which have now totaled 328,000 for the past 12 months, will “increase backlogs slightly as build rates are expected to increase in the coming months.”
“Even as orders decline, this remains a stout month of orders for the trailer industry,” said Ake. “Some dry van OEMs are running out of 2018 production slots, so we should see orders take their typical swoon in the summer months. However, the amount of orders already placed has created a substantial backlog, which will create another stellar year for the trailer industry.
“The freight growth numbers we continue to see are very impressive across all trailer segments, especially flatbeds,” he said. “Fleets are ordering trailers at a record pace to catch up to freight demand. The ELD conversion and driver shortage are just exacerbating an already tight capacity market. Fleets need more trailers now and orders placed for Q4 delivery means they expect the freight surge to continue for a while, a good sign for the economy.”
FTR: Tight truck market ‘best ever’ for operators
