The transportation sector responsible for moving raw materials and manufactured goods throughout the U.S. has hit the proverbial ceiling, meaning the freight market cannot get much tighter than it already has without a structural expansion. The national Flatbed Outbound Tender Reject Index (FOTRI) that measures flatbed truck capacity plateaued through April — hovering around 25% after averaging below 15% through most of the first quarter.
Last week the Institute of Supply Chain Management (ISM) reported a sequential decline in the Purchasing Managers Index (PMI), falling well short of expectation. The PMI largely measures manufacturing activity and was expected to expand above a 65 in April, but thanks to supply chain limitations and challenges with employment levels it fell to 60.7.
Flatbed operations are largely centered around but not limited to industrial production and construction activity. The former of which has had a slow and steady recovery, while the latter has had a bifurcation between residential and commercial activity.
As manufacturers come back online, they are finding it more difficult to source raw materials for production. Looking at the components of the PMI, the inventory levels have been contracting at a faster pace through each of the first four months of…