Summary
Trucking company planning continues to be mirrored in new truck sales - run with what we got. While freight demand is one big factor in the decision to not buy trucks now, others like the driver glut and a lack of financing add notably to it. It’s still about previously noted F-words (freight, financing, folks & fuel)! The other one - focus - is seems to be clearer now.
Analysis
My fellow Hoosier friend Eric Starks and his folks at FTR Associates are telling the manufacturing industry things that they don’t want to hear. That is that new truck sales continue to be running a half throttle - and there are no big projected changes coming. We generally agree, but still think we will see some bumps in orders from today’s levels before year-end.
North American new truck orders for April ’09 are quoted by FTR to be 7,935 - down 9% from March and down 57% from April ’08. This follows January numbers of a bit over 10,000 units, February a dismal 6,200 and March around 8,600. Of course, the ’08 comparison was during the time when freight was softening and financing was evaporating - where numbers were down 30%+ from ‘07.
Market shares of manufacturer’s Paccar, Navistar, Daimler Freightliner and Volvo / Mack aren’t changing. Their financing arms are really the only consistent players in the for-hire truckload sector.
The truck-buyers quandary on what, how many or even if one should buy is so clouded that the standard approach is just to hit the pause button. We know the freight issues, although we believe we are in the trough (as written previously). Driver issues are diminished - witness the dramatically lower driver turnover numbers. Financing is key, as one must finance both new trucks and trades to get throughput in the flow of equipment. Low fuel costs are also a positive (at least today).
The new technologies Selective Catalyst Reduction (SCR) versus Exhaust Gas Recirculation (EGR) seems to be less of a factor, since many buyers are still weighing the pros and cons of each - and are actually more loyal to their dealer (brand) than technology (unless it’s a disaster). Interestingly, new Navistar trucks seem to be doing better (reliability-wise) than the competition today - all with EGR. We also know that SCR (or advanced EGR) trucks will not be seen in any numbers in the real world until mid-’10. Nonetheless, it’s another reason to wait - at least until closer to the end of the year.
Some major truckload fleets like Swift offer insight into all sizes of trucking companies who seem to have firmed up their situation after parking some trucks and replacing their less-than-desirable truck drivers for better ones. These-type changes have affected the cost side by a couple pennies per mile - and it looks like the freight demand-capacity mix is working.
Within trucking, the food sector continues to be the strongest followed by consumer essentials. We also see some firming up in the home improvement sector, while the home building sector continues to be in the tank. We need not comment on the auto sectors’ negative impact on trucking, which is not expected to change for some time either.
While we see signs of bottoming within the freight marketplace, we must keep our eyes on the recent crude oil price increases. That is the old “elephant-in-the-room” issue that affects us all! We also need to watch the financing marketplace.
