Dip in Nov. conditions doesn’t mean a negative outlook: FTR

BLOOMINGTON, IN – Conditions remained strong in November despite a decline from the month before say analysts at FTR Intelligence.

The group’s monthly index measured a month-over-month decline to a level it calls more sustainable after extreme weather and tight labor conditions caused a short-term spike in October.

The slight dip didn’t dampen long-term forecasts, with FTR predicting a stronger outlook for 2018 if contract rates continue their upward trend.

While freight demand remains strong, FTR says with capacity nearing 100% that part of the upward trend doesn’t pose much of an additional advantage for future conditions. Jonathan Starks, Chief Operating Officer at FTR says with utilization levels fairly close to industry limits further gains are likely to come from significant pricing gains or additional freight growth.

“We are already seeing the pricing effects take hold with more substantial contract rate gains as spot market pricing surged after the hurricanes and during the holidays. Spot markets actually hit record high rates in the last week of 2017 and are starting 2018 at a significantly elevated level,” said Starks.

The top analyst says electronic logging devices (ELDs) imposing further limits on capacity and additional freight growth moving further into 2018 will help drive rates up.

“The next critical time frame is Q2 when truckload activity ramps up and the full ELD enforcement hits. As the recent Polar Vortex weather demonstrated, any modest change in operating conditions can have an oversized impact on carriers and shippers as the industry operates with very limited (if any) excess capacity.”