What is the Freight Transportation Services Index and Why is it Important?Posted On 1st March 2015
We are able to see the impact of the Freight Transportation Index in a small way, by the number of freight quotes we receive on our Web site. The Freight Transportation Index will cover air freight, pipeline movement especially transportation of petroleum products and natural gas, inland waterway traffic and for-hire trucking. However the Index doesn’t include activities performed by the US Postal Service or courier services. Each of the components that are included in the Index is carefully chosen to provide the best coverage of the transportation industry.
The Freight Transportation Services Index was developed by researchers in order to understand the relationship that exists between the transportation industry and the performance of the economy. When economists and forecasters want to measure the performance of the economy, they utilize indicators such as employment, sales and business inventories. Similar indicators are used in the freight transportation Index and they can be divided into 3: coincident, leading and lagging indicators.
Coincident indicators are the ones that follow the GDP; that is, when there is an increase in an economy’s GDP then these indicators increase and vice-versa. On the other hand, leading indicators are the ones that somehow follow the trend in the GDP in such a way that when they go up, the GDP will go up even if not immediately and when they go down a similar downward trend in GDP is later observed. Lastly, lagging indicators are the ones that follow the fluctuations in GDP. TSI takes into account all these indicators. It is the only combined measure of performance in the transportation sector that is adjusted on a monthly basis.
The main purpose of TSI is to take note of monthly shifts in the transportation services output and then analyze these changes and be able to come up with trends which impact the transportation sector. For example, December is very popular for shipping products before year end and for the holiday season and we see a substantial increase in the number of times potential customers use our freight calculator, for example.
We all know that the transportation sector is very seasonal and without adjusting the Index on a monthly basis, it would be impossible to obtain an accurate picture of what’s happening in the sector and plan accordingly.