There is a lot going on in the big truck biz.
First, the stock market suddenly realized that truck sales, contrary to predictions, haven’t stopped altogether, but rather continue at a reasonable pace. Therefore such stocks as Cummins recently were rewarded with significant gains, and while new truck sales can hardly be described as robust, they are acceptable and, most important, sustainable. Last year’s gloom and doom in this regard seems a bit off base.
Next, the long drought our industry has experienced with positive television exposure seems to be at an end. The airwaves went dark after many years of show after show that extolled the virtues of the heroes of the highways. However, a new series named “Ice Road Truckers,” documenting the long, lonely drives over frozen lakes, rivers and seas experienced by big rig drivers in Alaska, debuted last month on the History Channel.
Next, we learn that Navistar International Corp. is countersuing its largest customer, Ford Motors Co., over their mutual relationship involving diesel engines for large Ford pickup trucks (my description). Like most lawsuits, it’s very complicated, but it seems to have some parts discernable to a layman like me.
First, Ford is in much more trouble, in my opinion, than they or the press have reported. Bloated management ranks and terrible decision making, along with awful union contracts, have among other things put them in a highly uncompetitive position.
Rather than attacking the causes of their problems, Ford has, instead, put the squeeze on their suppliers to try to right their ship, and they appear to have put the vice particularly hard on International Truck and Engine Co., Navistar’s supplying division. Now, after withholding large payments due to Navistar, the suit alleges Ford plans to manufacture and sell an engine designed with significant help from Navistar, without cutting them in on the action. I think I’ll let the courts sort this one out.
Last but not least, recently The Wall Street Journal ran a story headlined “Europe Lays Tracks.” In it, they report that the European Union plans to spend $250 billion through 2020 to build new train tracks to solve what The Journal calls Europe’s “dirty secret”-in which goods shipped by truck have risen from 68 percent of all EU freight hauled in 1995 to 73 percent in 2005. The article goes on with the quote: “European roads can’t handle the road traffic anymore.” Please allow me to understand the logic here.
On the one hand, freight shippers obviously prefer shipping by truck. That is undoubtedly because their customers also prefer trucking over rail shipment. Trucks are much faster and can go most anywhere the recipient desires. There must be literally thousands of places in Europe which trucks reach today, which rails can’t ever service, or ever be able to, even after an investment of $250 billion-or $250 trillion. So, if I have this right, the roads are inadequate to meet legitimate business needs, but $250 billion is available, so don’t build more roads, but rather invest unfathomable sums to expand an alternate form of transportation in which users seemingly have no interest.
The genesis of the “dirty secret” is, of course, the EU’s being “in the forefront of the worldwide fight against carbon emissions” and the fact that per ton mile, trucks put more carbon dioxide into the air than do trains. Currently, in Europe they do, but isn’t this thinking backwards?
If shippers want trucks but they are too dirty, isn’t the best solution to make them cleaner? And, if it is going to take $250 billion to fix the problem, isn’t it better to have those who benefit from the solution foot the bill?
There isn’t a single person in our business that hasn’t at one time or another railed against the US Clean Air Act, its costs and the problems involved. However, I can’t speak for you, but in my opinion, I vastly prefer our solution to theirs.
