FTR’s Trucking Conditions Index (TCI) for August, as reported in the October 2012 Trucking Update published Oct. 1, rose 1.4 points from July to a reading of 5.8. The index has been in mildly positive territory, but without clear direction, since the economy weakened in early 2011.
FTR expects trucking conditions to improve in 2013 because of modestly better economics and a strong increase in capacity utilization stemming from added constraints on trucking from federal regulations taking effect in mid-year 2013. The TCI is a compilation of factors affecting trucking companies. Any reading above zero indicates a positive environment for truckers. Readings above 10 signal that volumes, prices and margins are in a solidly favorable range for trucking companies.
Jonathan Starks, director of transportation analysis for FTR, said, “Setting aside the inherent economic risks at the moment, we expect the rate environment to improve for fleets as capacity tightens in 2013, when more stringent Hours-of-Service rules go into effect. This also will have the effect of worsening the driver shortage, moving the situation from the currently ‘tight-but-manageable’ level toward a more acute shortage, similar to that experienced back in 2004, when the last major rule change went into effect. Importantly, truck fleets also will need to keep a keen eye on the economic environment heading into 2013 because a major downshift in growth would have major negative implications on margins just as the new tranche of HOS regulations go into effect.”
In addition, FTR released preliminary data showing September Class 8 truck net orders for all major North American OEMs at 15,205, down slightly from August. September 2012 orders were 35% below the same month last year, contributing to the weakest quarter since Q3 2010. The annualized rate for net orders placed in the third quarter of this year came in at just 174,400 units.
“September orders were at the low end of our expectations so they were somewhat disappointing,” Starks said. “We wouldn’t have been surprised to see three to four thousand more units ordered in the month, but the reported numbers were certainly within the range we expected to see, albeit softer than we would have liked. Even with sluggish freight levels, we still expect to see a seasonal bounce in orders during Q4, but likely not at levels that many in the industry are hoping to see.”
