Russian Invasion Creates Risks For US Shipping Conditions

March 14, 20220

According to the FTR Trucking Conditions Index (TCI), the war in Ukraine has already brought risk of worsening freight conditions in the states.

Due to the diesel prices rise, the index fell from 14.45 to 11.45 even before the war started. FTR says higher freight rights more than offset the impact of higher fuel prices. However, volumes dropped significantly. In the nearest future, a record increase in fuel prices will hit carriers, according to FTR.

The TCI is believed to remain positive, but downside risks «significantly increased».

According to Avery Weiss, Vice President of FTR – Freight, Russia’s war in Ukraine brought a high level of uncertainty to the dynamics of freight traffic. The jump in fuel costs for carriers is a matter of course, but it is not yet known whether the sharp rise in gasoline prices, in addition to the pre-existing strong consumer inflation and large swings in the stock market, will lead to a fall in consumer spending.

«Another major factor is the fate of small trucking firms, especially the dozens of thousands carriers that have been established since mid-2020 following an unprecedented rise in diesel prices. Many of them will fail. But whether the current impact of rates on carriers strengthens or weakens this result largely depends on whether failed carrier drivers leave the industry or return to senior positions at larger carriers. Generally, we would assume the last thing that could ease the pressure on interest rates, but the labor market has changed too much during the pandemic to make this a win-win.»


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