Good News, Truckers: Trucking Rates Will Go Up, FTR Says
BLOOMINGTON, IN — Freight transportation forecasting firm FTR expects to see general rate increases of four to five percent for the year for truckload with U.S. rate figures hitting six percent or higher than last year.
That’s according to FTR’s Shippers Conditions Index for March, which is a collection of factors affecting the shippers transport environment. Any reading below zero means an unfavourable environment for shippers. Readings below negative 10 mean that conditions for shippers are approaching critical levels, based on available capacity and expected rates.
In March, business conditions for shippers remained deep in the negative, the report stated. That’s good news for trucking companies and not such good news for shippers. The Index was similar to that in February, reading a negative 8.7, meaning very tight capacity to haul goods.
“Shippers learned that it doesn’t take much for a market that is operating with slim excess capacity to jump into the driver’s seat for rate increases,” said Jonathan Starks, FTR’s director of transportation analysis. “The strong spot market rate increases seen during January, February, and March highlighted how quickly the environment can change on them.”
Starks said that just one year ago, many industry sources showed that general rate increases were below levels from previous years and shippers were getting rate reductions.
“A fairly static economy allowed that to take place, but the introduction of new hours-of-service rules for drivers back in July 2013 changed that,” Starks explained. “Add in the potential for further economic acceleration in 2014 and we find it very unlikely that shippers will be able to get the rate reductions that they achieved last year.”
And the tight environment for shippers is not likely to change much in the upcoming month, FTR predicts, unless freight growth picks up as a result of a strengthening economy. For shippers, it warns that any additional improvement in freight tonnage, capacity could hit a critical stage, meaning shippers’ transportation costs will go up.
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