Trucking news: ACT says net orders for Class 8 vehicles continue to rise
Net orders for heavy-duty Class 8 commercial vehicles were in April were up 91 percent year-over-year
in the NewsPort of Los Angeles and GE enhance “digitization” of supply chain Epson partners with Loftware DHL opens second Dallas-area facility CSX CEO Harrison won’t back down when it comes to addressing service issues and operational plans Randstad Report: 76% of U.S. workers do not fear automation More News
As the economy slowly improves, truck capacity continues to tighten. That is apparent in the most recent data from ACT Research Co., a publisher of North American industry data, market analysis, and forecasting services for trucks and commercial vehicles.
According to ACT, net orders for heavy-duty Class 8 commercial vehicles were in April were up 91 percent year-over-year. This continues a sequential trend which has occurred in recent months, with net orders up 20 percent in February and 28 percent in March.
“From top to bottom, April was a healthy month for the Class 8 segment, at least in relative terms,” said Kenny Vieth, partner and senior analyst with ACT, in a statement. “Orders were above expectations, backlogs rose and retail sales remained elevated. If orders surprise on the high side again in May, it could have upside implications for our forecasts for the remainder of 2010 and 2011.”
Earlier this month, ACT said that Class 8 vehicle production is expected to increase by 6,000 units, which would hike 2010 year-over-year growth to 19 percent. ACT also said that its 2011 forecast was upped by 3,000 units for a year-over-year growth rate of 67 percent.
Company officials said that 2010 production growth is limited, due to it being well below replacement level demand. But they added that aging fleets have carriers expressing interest in upgrading fleets, with anecdotal evidence suggesting reserve capacity is in poor shape, due to carriers parking trucks during the recession.
As truck capacity continues to tighten, especially in the truckload sector, ACT is projecting that the industry will be at supply/demand equilibrium by the middle of this year, said John Burton, ACT vice president, transportation sector, in an interview.
“I would say carriers are increasingly optimistic, but issues with the transition to the new [EPA 2010] technology will cause some delays in when people start purchasing,” said Burton. “The other issue complicating the price of these EPA 2010 trucks are lower prices of used equipment right now. As the industry recovers, the used price market should somewhat recover, too, and that will help reduce the gap between new and used equipment.”
Used truck prices are likely to inch up throughout 2010 as industry demand decreases, which Burton explained will lead to an increased desire for people to come back into the industry and purchase used equipment at still depressed prices. And with Class 8 production predicted to increase 72 percent in 2011, coupled with many trucks being “cannibalized” by carriers to reduce maintenance costs, said Burton, a leading truckload carrier told ACT it would take $10,000-to-$15,000 per truck to get a good number of its parked units back online. This situation, he said, leads carriers to consider whether to repair them, put them in the used market, or take a loss and get a new piece of equipment.
As for what this data means to shippers, Burton said the one certainty is that rates-particularly in the truckload sector-are expected to rise in the next six-to-nine months. While this is unfortunate for shippers, whom have seen considerable rate relief during the economic downturn, Burton said rising rates are going to be a key component to returning the trucking sector to profitability, so carriers can reinvest in buying equipment again.
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
Subscribe to Logistics Management Magazine!Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!
BMW Takes the Inland Road to Efficiency Global Logistics: No Shortcuts to Security View More From this Issue