It’s likely no surprise to fleets and owner-operators that August was not a good month for most in the trucking business.
During the month, FTR’s Trucking Conditions Index fell to -12.54, down significantly from July’s already negative reading of -5.34. FTR said the sharp decline in conditions for carriers was due to significantly higher fuel prices and weaker freight volume.
The firm notes the index’s reading implies the toughest overall market conditions for carriers since the beginning of the COVID-19 pandemic in April 2020, adding “surges in fuel prices tend to hurt small operations disproportionately as they are less likely to benefit from fuel surcharges.”
FTR adds while the outlook is improved conditions, it doesn’t expect the index to turn consistently positive until late 2024.
“Market conditions for trucking companies look solidly negative through the first quarter of next year as we forecast no significant strengthening of capacity utilization or freight rates, and freight demand is stagnant,” says Avery Vise, FTR’s vice president of trucking. “A major question is whether consumer spending will remain as strong as it has been in the face of inflation, higher financing costs, and the resumption of debt service of student loan payments.”
Vise says freight demand isn’t likely to improve in the near-term, “so any near-term improvements in market conditions for carriers would likely come from a sharp drop in driver capacity.” Vise noted that while “small carriers continue to exit the market in high numbers,” those drivers are mostly being absorbed by larger carriers rather than leaving the industry altogether.
Ultimately, “diesel price volatility and the lack of any near-term strength in spot rates could accelerate carrier failures and tighten capacity,” Vise concludes.