April Commentaries

Coronavirus: A Global Threat and the Response
By Steve Graham, FTR Partner

With so much changing so fast over the past couple of months, it would be easy to get caught up in the hourly minutia and forget the truly extraordinary and unprecedented developments in the U.S. and the world. What follows is a recap of and update on the crisis with a focus on the economic fallout and outlook.

 

Rail Freight Volumes Have Likely Bottomed
COVID-19 Rail Freight Recovery Index

Weekly volume data from the Association of American Railroads and analyzed by FTR shows that rail volumes, in the intermodal and carload sectors, are likely near the bottom. This commentary provides insight that accompanies FTR's new COVID-19 Rail Freight Recovery Index, designed to assess freight activity on railroads across several sectors in response to the COVID-19 pandemic and recovery from it.

 

Refrigerated Freight Recovering as Total Truck Freight Volumes Bottom
COVID-19 Truck Freight Recovery Index

Daily data on the truck spot market indicates that the sharp drop in truck freight since mid-March stabilized in the second week of April and that volumes have remained largely flat for a couple of weeks. This commentary provides insight that accompanies the COVID-19 Truck Freight Recovery Index, a new index jointly produced by Truckstop.com and FTR Transportation Intelligence.

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Conditions Indices & Equipment Orders

February Likely The Last Positive Month For FTR’s Trucking Conditions Index Until 2021

Trucking Conditions Index
FTR’s Sharp declines in freight volumes, utilization, and rates due to the COVID-19 pandemic could lead to the worst overall trucking conditions on record during the second quarter of this year, according to FTR’s projections for the Trucking Conditions Index (TCI). FTR forecasts that the TCI will hit its lowest points in April and May, but the current outlook is for the index to remain negative well into 2021.

The most recent final index reading was 0.96 for February, which was down from January but still slightly positive. Before the COVID-19 crisis in March, the TCI had been positive for three straight months, which had not happened in a year.

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FTR’s Shippers Conditions Index Significantly Increases in February Reflecting a Sharply Positive Freight Market

FTR’s Shippers Conditions Index increased significantly in February to a reading of 7.93 up from January’s 3.73. This increase ended three straight months of small declines. It is likely to increase dramatically in the next few months in response to weak volumes and rates stemming from the COVID-19 pandemic. The sharp uptick is not necessarily a sign that shippers are doing well, as much as it showcases the impact on transportation of the COVID-19 virus. It is not expected to remain at elevated levels for long, but will remain positive for shippers through the balance of 2020 as capacity will be slow to reach equilibrium.

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FTR Reports Trailer Orders Fall Precipitously in March to 6,500 Units

FTR reports preliminary trailer orders for March continue to be negatively impacted by the COVID-19 pandemic, falling 54% from an already depressed February to 6,500 units for the month. Orders were down 55% from March 2019.
 
Totals in March were particularly weak for dry vans with some large fleets canceling orders that were spread out over the remainder of the year. Flatbed orders were also tepid, as the manufacturing sector of the economy was partially shut down in March. Refrigerated van orders fell, but not to the same degree as other segments. Trailer orders for the past twelve months now total 177,000 units.

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FTR Reports North American Class 8 Orders for March Plummet to 7,400 Units with Large Cancellations

FTR reports preliminary North American Class 8 orders plummeted in March to 7,400 units, the lowest order total since 2010. March orders were -48% m/m and -52% y/y. A significant number of fleets canceled orders previously placed due to the sharp and sudden downturn in economic conditions.

Uncertainty over the duration of the COVID-19 crisis is limiting orders to short-term, definite needs. FTR expects orders to stay near the 10,000-truck mark for a few months until economic activity regenerates. Class 8 orders have totaled 170,000 units over the past twelve months.

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