Although Class 8 truck sales were up in August and September and sales certainly are stronger than last year, 2011 is in no danger of breaking any records. Still, optimism prevails.
[email protected]Randall-Reilly’s monthly MarketPulse survey of for-hire trucking executives shows carriers in a buying mood with 47 percent planning to replace aging equipment in the next six months and another 40 percent looking to increase their fleet size.
A mere 11 percent expect to do neither — the lowest figure we have seen since we began tracking this a year ago.
So the gravy train of strong aftermarket parts and service is about to end, right? Not hardly. First of all, although investors who have driven the Dow to its best October in 30 years seem to think a double-dip recession is less likely, there still aren’t too many signs of a robust economic recovery. And carrier’s growth plans can easily change in the face of bad news.
Replacement demand probably is more certain; many fleets simply have no choice anymore but to replace their trucks. Maintenance costs are rising, and they can’t find enough owner-operators to take up the slack.
Even if a surge of orders does occur, don’t look for truck makers to move too quickly — if at all — to increase production capacity.
Everyone remains weary of the financial and even emotional consequences of the sharp buy/no-buy cycles of the 2000s. And even if OEs wanted to run more shifts, there’s no guarantee they could get the parts and components to do so.
And there are at least two other issues to consider: The need for fleets to realize a reasonable return on their capital investments and their inability to get enough drivers or even technicians to handle growth.
Don’t expect fast growth or declines in the coming years.
As equipment costs rise due to environment regulations and rising materials costs, fleets just can’t afford — or can’t get financing — to buy trucks without a solid plan for recouping those investments.
Nor does it appear fleets will find it easier to get drivers or technicians. Many trucking companies can’t get enough drivers now in the face of 9 percent national unemployment.
Hiring standards are greater due to regulation and liability worries, and things will only get tougher as the U.S. work force ages and the unemployment rate drops.
Reggie Dupré, chief executive officer of Lafayette, La.-based Dupré Logistics, sees major implications in the shift from a “climate of abundance” in trucking to a “climate of scarce resources.”
Until recently, there has been enough money, drivers and technicians that the relationship between carriers and shippers naturally was adversarial, Dupré said in a panel discussion on the future of the trucking industry last month at the American Trucking Associations’ annual meeting in Grapevine, Texas.
Carriers pushed for higher rates while shippers kept rates low by shopping around.
Scarcity of resources is changing this dynamic, Dupré argues. The new competitive model will be one of dedicated service and collaboration between shippers and carriers, Dupré believes.
What does this mean for you?
For starters, it’s likely that some fleets simply will give up performing their own maintenance, finding it impossible to get qualified technicians. And a closer collaboration between fleets and shippers probably means greater equipment utilization — more time hauling freight and less time waiting at docks, for example.
Fleets won’t buy as many trucks, but they will run them harder, and, naturally, parts and components will wear out faster.
Add to this much tighter safety oversight of vehicle condition, and the future promises strong aftermarket activity with fewer up-and-down swings.
You could live with that, right?
Avery Vise is executive director, trucking research and analysis for Randall-Reilly Business Media and Information.
