FTR anticipates improved conditions for truckers in 2016
(January 7, 2016) - Conditions are expected to improve for truckers in 2016 as shippers become concerned with the possibility of tight capacity in the second half of the year, according to FTR Transportation Analysis. FTR is forecasting 3 percent or better growth for truck loadings in 2016, reflecting stronger than expected results in 2015 and continued economic growth going forward.
“The trucking environment has slowed during 2015, but compared to recent history it is still operating at a reasonable level,” said FTR Chief Operations Officer Jonathan Starks in a Dec. 10 report. “Spot market activity is well below what was seen during the very tight conditions that stemmed from last winter’s disruptions. The Market Demand Index from Truckstop.com is down nearly 45 percent from prior year levels and is off even more significantly from the highs seen earlier last year.”
However, pricing on the contract portion of business has held up better than expected, noted Starks. “Shippers seem to be choosing capacity over cost savings, especially when it comes to their core carrier base,” he said. “This is a relatively easy choice given the downward moving fuel markets. The easy fuel comparisons are expected to change in 2016, and that will make it more difficult for shippers to be as lenient on trucker’s base rates. We expect conditions to improve as we move through the year as the market further prepares for tight truck capacity when the HOS, ELD, and speed governor rules are implemented over the next two years.”
He sees the main risk right now as the weakness in manufacturing and the high inventory levels. “The inventory situation needs to be corrected before we are likely to get a sizable burst of manufacturing activity,” he said. “Look for that to happen early in 2016.”