Trucking Industry's Market Conditions: A July 2023 Overview
Our articles may contain affiliate linksIn July, the Market Conditions Index showed some positive movement, but it still indicated favorable conditions for shippers within the trucking industry. According to FTR's recent Trucking Conditions Index report, the conditions for trucking companies in July were slightly better compared to June.
FTR's Trucking Conditions Index for July 2023, while improved from June, remained in negative territory at -5.34, in contrast to June's -6.29 rating. This improvement was primarily driven by increased freight volume and capacity utilization, which helped offset lower rates and rising fuel expenses.
However, carriers have continued to grapple with challenging market conditions since July. FTR anticipates that the TCI will dip further in the near future due to surging fuel prices in August and September. Apart from fuel price fluctuations, the outlook suggests only gradual improvement, with the expectation of reaching neutral readings by the third quarter of 2024.
Avery Vise, FTR's vice president of trucking, highlighted that the overall truck freight market remains unfavorable for trucking companies, particularly impacting smaller carriers due to the sharp increase in diesel prices. Many smaller operations are exiting the market, and this trend could accelerate if diesel prices continue to rise significantly.
Vise also noted that larger carriers have absorbed a considerable number of owner-operators who temporarily transitioned from independent operations to working for trucking companies. However, the truckload carriers are approaching a saturation point, given the sluggish freight demand. While there may be a modest tightening of the market due to fewer working truckers, substantial improvements for carriers will depend on stronger freight volume.
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Highlights of the article
- Market Conditions Index improved in July but remains shipper-favorable.
- FTR's Trucking Conditions Index for July 2023 at -5.34, up from June's -6.29.
- Improved freight volume and capacity utilization contributed to the positive shift.
- Challenging conditions persist for carriers, with surging fuel prices expected to impact TCI.
- Smaller carriers facing financial tightening due to rising diesel prices.
- Larger carriers absorbing owner-operators, but truckload carriers nearing saturation.
- Significant carrier improvement depends on stronger freight demand.
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