A Rising TCI Gives New Hope to the Trucking Industry

October 5, 2012

The Trucking Conditions Index (TCI) of FTR rose to 5.8 in August, compared to 4.4 in July. Since the beginning of 2011, despite a weakening economy, the TCI continued to hover in a mildly positive zone. However, it did not indicate any clear direction for the industry. In this backdrop, the recent spurt in the index is a significant new hope for faster growth in the trucking business but this may be wishful thinking. What happens on November 6th, 2012 will impact this business just like it does every other and the TCI will improve under more business friendly conditions.

More Regulations

The American economy has started showing signs of improvement but in other areas it has not, which has led the FTR to anticipate a considerable improvement in the trucking conditions in 2013 despite America still being in a recession and the unemployment numbers remaining incredibly high. An increase in capacity utilization and a slightly improving economy, but not nearly as much as other post-recession recoveries, should help offset some of the burden that new federal regulations are likely to have on the industry around the middle of 2013.

America is already being pounded into submission because of regulations; many people wonder how much more it can take?

A Shortage of Drivers

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 will also have the effect of worsening the driver shortage, moving the situation from the currently "tight-but-manageable" level towards a more acute shortage, similar to that experienced back in 2004, when the last major rule change went into effect." These do not seem to be encouraging words for the industry.

Regulations Drive Up Costs and Eliminate Jobs

The conditions for the trucking industry may not look any brighter now than it does a year from now if the current American leadership remains the same, but it is still important to keep a close watch on the developing economic environment over the coming months. What happens on Nov. 6th, is going to be monumental for the trucking industry and every industry under the flag. Starks cautioned: "A major downshift in growth would have major negative implications on margins just as the new tranche of HOS regulations go into effect." Some things just really do not have to be said.

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