Gauging trucking’s prospects for the spring stretch

05.06.14 | Sean Kilcarr, FleetOwner

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There’s been some conflicting data out there in freight world of late: some seeming to favor trucking, especially in terms of tight capacity, with others not so much. The latest Trucking Conditions Index (TCI) metric compiled by FTR Transportation Intelligence offers a good case in point.

In March, FTR said its TCI metric jumped more than one point to a reading of 8.69, reflecting extremely tight capacity in the truckload sector. That being said, though, Jonathan Starks, FTR’s director of transportation analysis, cautioned that there remains a possibility for some relief of the tight truckload capacity over the next few months if freight growth slows as expected in the second quarter.

He added that the stressed capacity situation of today is caused, primarily, by regulatory drag on shipping capacity along with the winter disruptions. However, even with those caveats in mind, FTR believes its TCI indicator for the remainder of 2014 is expected to remain at the same level, meaning trucking capacity will stay tight.

“Truckers should be feeling much better now that they have finally been able to use the ever tightening truck supply to get much needed rate gains,” Starks said. “It looks like much of the supply-and-demand balance is coming back down to a more ‘normal’ level as shippers are finishing their spring freight season and the backlog of loads caused by the winter weather has largely subsided.”

He stressed however that “normal” remains a relative term since the industry continues to be operating at much higher levels of utilization than what’s been seen in the past. “Recent data shows a strong uptick in economic activity, but it will be hard to know if we are merely playing catch-up from a bad first quarter or if there is some real sustained growth occurring.”

Mark Montague, a pricing analyst with DAT Solutions, echoed that same question regarding the “normalcy” of the current freight market is a recent blog post, though he also pointed out that it’s been a “year of record freight” on the spot market so far, despite the rough winter weather.

In March, for example, freight availability rose 56% on the DAT North American Index, including Canada, compared to the same month in 2013. Within the U.S. the year-over-year change was even more dramatic: a 64% increase divided among the dry van (63%), flatbed (58%) and refrigerated (70%) trailer segments of the truckload business.

So how’s all of this freight activity, or sometimes the dearth of it, affecting truck sales? From FTR’s perspective, preliminary data for April indicated North American Class 8 truck net orders at 24,115, which is 11% below March results yet still 5% above a year ago.

Overall, FTR’s data indicates that when Class 8 orders over the last six months are annualized, the market is hovering around 334,000 units, which is pretty strong.

“April orders generally met our expectations and are in line with our forecast,” noted Don Ake, FTR’s VP of commercial vehicles. “Class 8 order activity was bound to fall back some from the velocity of the past four months.  With orders up almost 28% year to date, the industry is on track for a great year.”  

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