Class 8 Fleet Declines in 3Q as Freight Market Weakens

By Daniel P. Bearth, Staff Writer

This story appears in the Dec. 1 print edition of Transport Topics.

The number of U.S. Class 8 trucks on the road at the end of the third quarter dropped by 17,000 from a year earlier, the first year-to-year decline since research firm R.L. Polk & Co. began reporting on truck fleets in 2003.

In a Nov. 17 report, Polk said U.S. fleets operated approximately 3.57 million Class 8 vehicles at the end of the third quarter, down from 3.61 million on June 30, and a 0.4% dip from 3.59 million at the end of the third quarter in 2007.

“The decline in Class 8 vehicles in operation is directly related to the economic conditions: construction is down, retail demand for goods is down, unemployment has increased and tonnage is down,” said Gary Meteer, director of Polk’s commercial vehicle group.

“It takes a lot to move the number down, and the reduction is an indication of just how weak the market is for Class 8 vehicles,” Meteer said.

Many fleets have held off on buying new vehicles this year as demand for freight hauling has softened. And many fleets have gone out of business.

Truck sales have tumbled 14.4% so far this year from anemic 2007 levels, WardsAuto.com reported last month (11-24, p. 1).

Motor carrier bankruptcies removed an estimated 127,000 heavy-duty tractors in the first three quarters of 2008, according to Donald Broughton of Avondale Partners (11-3, p. 1).

The slumping U.S. economy has also reduced freight from Canada, leading truckers there to cut back on capacity.

“Carriers have been getting rid of trucks and not buying new ones,” said David Bradley, chief executive officer of the Canadian Trucking Alliance. “Tighter credit has also made it more difficult for people to enter the marketplace.”

Polk’s data includes, in addition to highway tractors, vocational equipment, such as dump trucks and garbage collection vehicles, plus large buses and recreational vehicles.

Registrations of new Class 8 trucks in the first nine months of 2008 declined 27.2% from a year ago and were at the lowest level in five years, Meteer said.

He predicted registrations of new Class 8 vehicles this year will end up 21.6% below 2007, with 133,000 new units entered into the total fleet.

Polk forecast that 2008 would see a total of 485,000 new commercial vehicles registered in all vehicle classes, the lowest annual total since 1994, and a drop of 24.5% from the 642,000 vehicles registered in 2007.

New commercial trailer registrations are also off sharply this year, with van registrations falling 34.4% below last year and flatbed registrations dropping 43.9%.

Because of a dramatic drop in freight, carriers have been in a “self-imposed capacity constraint,” said Chris Ferrell, a principal with Tompkins Associates, a supply-chain consulting firm in Raleigh, N.C. “There’s absolutely been a contraction in [shipping] demand in the past few weeks.”

In a survey of shippers conducted by Tompkins earlier this year, a majority of respondents said they were having a hard time finding trucks, especially in areas where backhauls are limited and truckers are forced to run more empty miles to pick up loads.

The Tompkins survey, which covered 180 companies in retail, manufacturing and wholesale distribution, found that shippers were changing the way they use trucks, moving from less-than-truckload to truckload and converting truck freight to rail.

Both large and small fleets have cut back on truck purchases, Meteer said.

Fleets with 101 to 500 Class 8 vehicles registered 25% fewer units in the first nine months of 2008 compared with the same period a year ago. The biggest decline — 39.2% — was for fleets with six to 25 vehicles.

Solo truck operators and fleets with five or fewer vehicles, which held up nicely during 2007, have registered 27.7% fewer vehicles so far in 2008, Meteer said.

Registrations for all classes of new commercial vehicles in September were the lowest since February 2003, Meteer said.

Polk’s data showed that fleets operating medium-duty Class 3-7 vehicles registered 32.4% fewer new vehicles in the third quarter.

The normal summer boost in truck registrations for Class 6 and 7 vehicles did not materialize this year, and contributed to an overall decline in new commercial vehicle registrations, Meteer said.

“These large declines are related to the economic slowdown,” Meteer said. “With the slowdown in housing, uncertainty regarding employment and the tightening credit situation, rental vehicles may not be in as high demand and the slower business environment means that retail is not leasing vehicles to move extra goods.”

The economy and tight credit also has affected the use of Class 3 vehicles by independent contractors and private individuals, Meteer said.