Heavy Duty Trucking

MAY 2014

The Fleet Business Authority

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18 HDT • MAY 2014 www.truckinginfo.com Quotable "The global medium-heavy- duty truck market in 2014 will enter a phase where the world will look equally at developed and developing markets to offer concerted efforts to lift medium- heavy-duty truck sales." – Sandeep Kar, Frost & Sullivan Trucking's Most Respected Business Report hotline Chinese truck Visitors to the Cummins Technical Center in Co- lumbus, Ind., last month got to see an unusual sight: A Chinese com- mercial truck. Jointly developed by Foton Motor and Daimler AG for sale in the huge China market, the Auman GTL features Cummins-designed 11- and 12-liter ISGs that will be built in Beijing. The new trucks and engines were tested in China, Tibet and the U.S. Read more at www.truckinginfo.com/ Cummins-Foto n Loads, capacity and the Trucking Conditions Index Spot Freight: In a year of a record amount of freight on the spot market, March was no exception, with freight availability increasing 56% compared to a year ago. The U.S. saw a 64% increase, with vans up 63%, f atbeds 58%, and a 70% increase for refrigerated trailers. www.truckinginfo.c o S S po t Fr i ei h gh t: In a year of a record amount f of f reig ht on h th e spot market, Ma Ma rc rc h wa wa s s no no ex e ce ce pt pt io o n, , w it t h fr eight availability in in cr cr ea ea si si ng ng 5 6% 6% compared to a year ago. Th Th Th e U. S. s aw aw aw a 64 64 % in in cr cr ea ea se se , wi w th vans up 63%, f at at at be be be ds ds ds 5 8% 8% 8% , and a 70% in in cr cr ea ea se se f or or re re fr fr ig ig er er at at ed ed trailers. 2500 2000 1500 1000 500 0 (DEC) JA N JUNE JULY AU G SEP OCT NOV DEC FEB MAR APR MAY Index: August 1996 = 100 Spot Freight Index (Information provided by TransCore's DAT services) 2010 2011 2012 2013 2014 FTR's Trucking Condi- tions Index increased again in March to 8.82. The index has been above 8.0 in six out of the last 10 months. When the index gets above 10, it typically suggests that the indus- try is at a critical stage for growth. The only month above 10 during this whole upturn was early in 2010 when trucking was in the very early stages of recovery. When we look at the underlying components of the TCI, there are several things that stick out. Is freight leading the way? We have been hearing from fleets that there has been an increase in freight demand and that capacity is extremely tight. Yet the freight component of the TCI that measures loadings originated has been at only modest levels, and in March only added 1.1 points to the TCI, which is in line with the previous three-month average of 1.08. What about tight capacity? The capacity utilization component of the TCI added 2.04 points, nearly twice as much as the freight component. However, this is down from the previous three-month average of 2.35. Because utilization levels are already quite high, they are not adding significantly to the TCI since they have less upward ability. Why the uptick in TC I? What's currently moving the TCI number higher is the rate component. This takes into account what truckers are charging for moving the freight. FTR also has a forward-looking component for rates, and is looking very favorable. The rate contribution to the TCI is sitting near a reading of 5 for March. This is more than the loads and capacity utilization numbers combined. Wildcard! The big wildcard that could move the TCI number above that critical level of 10 is the freight component. If freight demand picks up this year, not only would the loadings component increase, but also the utilization numbers would move higher as more equipment is put to work. Then you would see the freight rate component increase, as tight capacity utilization would push rates even higher. It will not take a large increase in freight to push the industry over the edge and create a real capacity crisis. More info: From FTR, www.ftrintel.com/hdt or Eric Starks at (888) 988-1699. 12 10 8 6 4 2 0 -2 PHOTO BY TOM BERG Source: FTR Graph does not contain all sub-components. All sub-components add up the total TCI Index. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Jan-13 Feb-13 Mar-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Apr-13 May-13 Jun-13 Jan-14 Feb-14 Mar-14 ■ ■ ■ ■ TCI Total Index Freight Loads Contribution Capacity Utilization Contribution H o t l i n e M a y . i n d d 1 8 Hotline May.indd 18 4 / 3 0 / 1 4 4 : 3 0 P M 4/30/14 4:30 PM

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