What is the transportation services index?
The transportation services index (or TSI) is a measure of changes in the passenger and freight movements in the U.S. domestic market. This index includes only domestic “for hire” transportation-operated companies that provide transportation services for a fee. It excludes non-commercial passenger transportation, taxi, and intercity bus services.
The TSI, which is released monthly by the Bureau of Transportation Statistics (or BTS), consists of three indexes—freight index, passenger index, and combined index. This TSI considers all modes of transport that are used on hire, including air, rail, road, and water.
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The freight index encompasses five modes of transport—trucking, air, water, rail, and pipeline. While trucking is the most widely used mode of transport, the fastest growing model of transport is by air, although it’s the smallest in terms of volume.
The freight TSI increased by 0.2% quarter-over-quarter in 2Q14 (or the second quarter of 2014) after declining by the same percentage in 1Q14 when adverse weather conditions impacted the sector. In June 2014, however, the index decreased to 119.1 from an all-time high of 120.2 in May 2014.
The passenger TSI encompasses three modes of transport—air, rail, and transit. Aviation is the passenger TSI’s largest component. The passenger TSI increased by 0.4% quarter-over-quarter in 2Q14 and by 0.9% in 1Q14. In June 2014, the index was 119.6, the same as in May 2014 but an increase of 1.7% compared to June 2013.
Why is it important?
The research findings on the relationship between the TSI and economic indicators revealed that the freight TSI acted as a strong leading economic indicator. On comparing the turning points of the freight TSI with the economy’s growth cycles, it was found that the freight index measure leads by an average of four to five months.
The passenger TSI is also an important index to track, as it’s supposed to act as a coincident indicator. So movements of these indexes act as indicators of future trends in the economy and in the transportation industry.
In the U.S. airline sector, the top companies—which includes Delta Air Lines (DAL), United Continental Holdings (UAL), American Airlines (AAL), Southwest Airlines (LUV), and JetBlue Airways (JBLU)—provide passenger and freight transportation services.