Signs of slight progress were made in the most recent edition of the Trucking Conditions Index (TCI), which was issued today by freight transportation consultancy FTR.
According to FTR, a TCI reading above zero represents an adequate trucking environment, with readings above 10 indicating that volumes, prices and margin are in a good range for carriers.
For December, the most recent month for which data is available, the TCI reading came in at -6.1, faring better than November’s -7.94, which followed October’s -11.25, its lowest level since the April 2020 all-time low, at -28.66. The September TCI reading came in at -2.35.
FTR officials attributed the slight improvement to a sharp drop in diesel prices. And it added that changes in all freight-related TCI components—freight volume, capacity utilization, and freight rates—were unfavorable for carriers in December. What’s more, it observed that the rates component was the most negative it had been since May 2020, adding that the outlook is for mostly similar TCI readings through 2023 with no positive readings expected until late 2024.
“Our forecasts indicate continued deterioration in overall market conditions for trucking companies, but uncertainly is still surprisingly high considering that we are nearly three years past the pandemic-induced contraction,” said Avery Vise, FTR’s vice president of trucking, in a statement. “Even as record numbers of small for-hire carriers exit the market, payroll job growth in trucking continues to rise, suggesting that overall driver capacity is not falling much—if at all—so far. Although this trend might be reassuring in the near term, it could limit carriers’ margin gains in the next upturn. Freight rates are weakening, but in the contract arena, they look to remain significantly higher than the peak of the last cycle. Carriers’ ability to manage costs always is key to profitability but perhaps never more so than now.”