A measure of business conditions in the trucking sector shows that the month of October was the toughest overall environment since April 2020, which was in the opening months of the pandemic, according to the freight transportation forecasting firm FTR.
The freight market has always moved in cycles, and for months now it has been firmly in the favor of the carriers, since demand was high and capacity was tight. But this data shows that the pendulum continues to swing to give greater advantage to shippers.
Specifically, trucking companies saw a “major deterioration of financial conditions” in October, due to sharp increases in fuel and financing costs coupled with an unfavorable trend in freight rates.
Bloomington, Indiana-based FTR measures those trends through its Trucking Conditions Index (TCI), which tracks changes in five conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel price, and financing. Combined into a single score, the number represents good, optimistic conditions when positive and bad, pessimistic conditions when negative.
For the month of October, the TCI fell to a -11.16 reading from the -2.35 reported in September. That made October the weakest reading since the all-time low reading of -28.66 in April 2020.
Despite the drop, FTR said that the recovery in oil prices back to lower long-term rates should moderate conditions looking ahead.
“We do not see a month on the horizon as difficult as October was for trucking companies, but nor do we expect much for carriers to get excited about. The rate environment looks to keep market conditions at least mildly negative into 2024,” Avery Vise, FTR’s vice president of trucking, said in a release. “Plunging diesel prices obviously are bolstering financial conditions in the near term, and the hit from financing costs likely will begin moderating by mid-2023. Those costs have disproportionately hurt smaller carriers recently, and improvements in those situations likewise will not help larger carriers as much as smaller ones.”