Morgan Stanley’s flatbed freight index indicates that flatbed capacity continues to tighten and is tighter than was the case in either of the last two years for early May. The index is just below the 11-year average for May so it would still be hard to argue that capacity is tight. In 2016, flatbed capacity was more readily available than was the case in 2015 until the last 6 weeks of the year, when the lines crossed. Flatbed capacity has continued to tighten so far this year and at a pretty steep pace the last two months.

2016 was a year of unusual stability and remarkable excess capacity in the flatbed market. With the ELD mandate not coming until December (well after the peak time of year for flatbed demand), it is possible that we will not see significant tightening of flatbed capacity in 2017, but if the slope of the line continues through the remainder of Q2 and into Q3, flatbed capacity may be in short supply this summer.

Flatbed capacity-demand balance favored the carriers over the shippers more so in 2014 than in the prior two years, but capacity never became as tight in 2014 as in 2010 and 2011. Low oil prices and a falloff in drilling activity meant that capacity never did tighten in 2015 or 2016. The index measures incremental demand for flatbed truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

MS 05-02-17 flat

Graph reproduced with permission from Morgan Stanley. *2006-2016 average trend line excludes financial crisis years of 2008 and 2009. For more information contact: Alex Vecchio at Alexander.Vecchio@morganstanley.com