This metric measures the number of trucks needed by the market to move the current level of freight and compares that figures to the number of active trucks (in service, manned and ready to run) that are available.
Active Truck Utilization is a measurement of the tightness of trucking capacity. It measures the number of trucks needed by the market to move the current level of freight and compares that figures to the number of active trucks (in service, manned and ready to run) that are available. In general, a figure above 95% indicates a tight market where the majority of the truck population is at work. A figure below 90% indicates a weak market where a significant portion of the truck population is idled or underutilized.
Active Utilization(%) = [Needed Trucks] / [Active Trucks]
What does it mean? This figure is a good indicator of where available capacity and freight rates are heading. A figure above 95% indicates a shortage of capacity which could enable carriers to raise rates. Slack utilization below 90% indicates an over-capacity situation that will lead to significant rate pressure. Importantly, this figure is a measurement of ACTIVE trucks and is not affected by the misleading presence of surplus trucks on equipment lots and driveways that are not in current service.
This is a combination of 4 primary pieces of information.
- How much freight is there?: There is no other source besides FTR that has a measure of all trucking freight. This is derived from our Freight-cast transportation model. This data tells us how much tonnage, # of loadings, Avg LOH, etc.
- Size of truck population: we have truck sales data going back to the 1930s and a mortality curve of truck life that estimates how many total available trucks are in the U.S. When we compare our outputs to results from other sources (such as IHS Polk registration figures) we get a comparable result as to the number of absolute trucks that are available.
- How productive are trucks?: We have a truck productivity model that has numerous inputs to help us understand how many loads the "average" truck is able to make in a quarter (speed, work hours, regulations, etc.). We compare the results to a selection of real-world data (i.e. truck orders, sales, etc.) to understand how well the outputs are comparing to actual results. When you compare the productivity factor (loads per quarter) to the total number of loads you have a raw estimate of how many vehicles are needed.
- Idled versus Active: The last component (and most difficult to assess) is how many of the unused population of trucks are active in the marketplace versus truly idled/parked and not participating. This requires a fair bit of modeling and includes some major assumptions about how the regulatory environment impacts the ability of the marketplace to flex up or down.
In the end, we are simply comparing the total number of needed trucks (bullet 3 - vehicles needed) versus the total number of active trucks (bullets 3+4 - all active vehicles) = Active Utilization %.