Flatbed capacity is a little tighter than normal, but could get even tighter in the next couple of months
Morgan Stanley’s flatbed freight index indicates that flatbed capacity is tighter than normal for late September, but unlike the van index has not surpassed 2014 levels. As we head into Q4, I expect flatbed capacity to get tighter. Demand will strengthen for building products shipments as a result of the hurricanes. Supply will also be challenged. There are very few large and very many small flatbed carriers. As the smaller carriers implement ELDs in Q4, utilization will decline reducing effective capacity.
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 continued to tighten through the first half of 2017, but leveled off in Q3. If the index holds at the current level, capacity will be tighter in Q4 than in any recent year.
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. So far, 2017 as been more of a “normal” year, tracking fairly close to the longer-term average.
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.
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