FTR Trucking: The Economic Engine Keeps its Pace
Freight and trucking conditions are known for being good barometers of the overall economic health of a country. Freight Transportation Research Associates provides data and reports on the conditions for the trucking and shipping industries. The company provides its Trucking Conditions Index (TCI) which combines analysis on “load volumes, the capacity environment, rates, costs, and the truck driver situation” to give an overall opinion on the industry.
The most recent monthly report reports an optimistic picture for the month of May. In 2018, the TCI has suggested that truckers have maintained full capacity utilization with ratings well above the same month a year ago. As the freight season enters its peak, FTR sees “the TCI reading growing further through the calendar year and likely into 2019.” Overall, the reading suggests a continued sense of optimism in the industry despite fuel costs rising. FTR’s truckload rate forecast for the year is reported at 13 percent.
The data above represents well the Dow Jones Transport index which is popular as a cyclical indicator. As long as the network of goods is greased and active, the economy will expand. Companies in the index tend to be less defensive and move with the ebbs and flows of a country’s economic performance. The Dow Transport chart taken in tandem with the FTR data shows that these stocks move together in step. The steep increase in the TCI and truck orders at the turn of the new year corresponds with an increase in performance of Dow Transport stocks.
The trend in orders for new trucks also reflects the strength in the market. Though its off near-term highs, purchases remained strong in June 2018, 140 percent over the year before. In fact, FTR reports that “fleets are ordering such large numbers of trucks that the OEM production cannot keep up with demand due to component shortfalls.” Both reports are showing that the economy is operating at extremely elevated levels.