Class 8 Fleet Grows 4.8% as Freight Levels Drop
By Eric Miller, Staff Reporter
This story appears in the June 18 print edition of Transport Topics.
The U.S. heavy-duty truck fleet was about 4.8% larger at the end of the first quarter of 2007 than it was in the comparable period last year, according to new data from R.L. Polk & Co.
Capacity swelled at the same time that fleets were reporting freight volume declines and truck makers were recording plunging sales of new vehicles.
Polk, a market research firm, said 3.54 million Class 8 trucks were in service at the end of the first quarter of the year, compared to 3.38 million a year earlier.
“The data we have still say the smaller fleets are still driving an awful lot of the business,” Gary Meteer, senior director of Polk’s commercial vehicle unit, told Transport Topics. “The large companies seem to be fairly stable.”
But, he added, the “big guys are fighting for the tonnage that’s there.”
Fleets overall grew larger, despite a 22.8% decline in the number of new Class 8 truck registrations, to 52,593 units, Polk said in its report.
At the same time, the number of used Class 8 trucks registrations fell by 3% in the first quarter of 2007 to the lowest level in the past five quarters, Polk said.
Polk reported a more pronounced decline in the number of new registrations in Class 8 trucks from large fleets. Fleets with 500 or more vehicles tallied a 33.2% drop in new registrations during the quarter, but new registrations by fleets with fewer than five vehicles slipped just 4.7%.
“While a number of large fleets have made specific comments about their intentions to purchase units powered by the 2007 diesel-compliant engines, it appears that there is a wait-and-see position by many others,” the report concluded.
Through the first five months of 2007, truck makers sold 76,643 Class 8 units, down from 114,969 trucks through the same period in 2006.
Polk’s first-quarter report showed fleet size has been growing since the end of the third quarter of 2006. With 161,000 more heavy trucks on the road in the first quarter of 2007 than in the first three months last year, the number of trucks in service has increased by 59,000, or 1.7%, since the end of September 2006.
Meteer said it was ironic that the primary fears that have kept carriers from purchasing 2007 engines — that ultra-low-sulfur diesel would not be available and concerns about engine performance — have not really come true (see story, p. 1).
Meteer said predominantly small carriers have been buying new equipment. “The small local, regional or even state business is pretty good,” he said. “They’re the ones buying the new equipment because they have the
contracts.”
The continuing fleet expansion may exacerbate overall capacity issues noted by speakers at a Bear, Stearns & Co., Global Transportation Conference in May (5-14,p. 1).
One of the speakers, Eric Starks, president of freight forecasting company FTR Associates, said the U.S. was in a “freight recession,” exacerbated because fleets overbought as many as 110,000 tractors last year.
James Meil, Eaton Corp.’s chief economist told the conference audience, “There are 120,000 trucks too many right now” on the road, and about 7% of the U.S. and Canadian fleet is currently underused.
Truck tonnage in the U.S. dropped in April, the ninth time in the past 10 months, according to American Trucking Associations.
Meteer said that 16,371 Class 8 new registrations for April 2007 — numbers not included in the first-quarter report — showed the declining number of new Class 8 registrations is continuing.
Polk projected that new class 8 truck registrations will fall 30.2% to 185,500 by the end of 2007, a drop of 80,500 from last year’s total of 266,000.
Meteer expected some carriers to postpone buying new trucks “as long as they can,” he said, but most will have to purchase new equipment by the end of 2007 or sooner.
The trend “is consistent basically with what we’ve been seeing and what we’ve been expecting, and that’s a drop-off in Class 8 orders,” David Ross, a less-than-truckload analyst for Stifel, Nicolaus & Co., told Transport Topics.
“It looks like the larger fleets have a more severe dip year-to-year . . . in terms of new orders because they have better balance sheets and were able to pre-buy and really sit out this year while the engines are working out the kinks,” Ross said.
Some of the conclusions in the Polk report were echoed in a PHH FirstFleet survey of 67 mostly private fleet managers. The June 11 survey, commissioned by PHH and conducted by Starmark/MARC USA Research, concluded that the most private fleet owners and managers are delaying 2007 engine purchases.
Alex Popov, PHH’s vice president of fleet services, said the survey showed that fleets have a “wait-and-see mentality” and that the uncertainty “is scaring them.”
This story appears in the June 18 print edition of Transport Topics.
The U.S. heavy-duty truck fleet was about 4.8% larger at the end of the first quarter of 2007 than it was in the comparable period last year, according to new data from R.L. Polk & Co.
Capacity swelled at the same time that fleets were reporting freight volume declines and truck makers were recording plunging sales of new vehicles.
Polk, a market research firm, said 3.54 million Class 8 trucks were in service at the end of the first quarter of the year, compared to 3.38 million a year earlier.
“The data we have still say the smaller fleets are still driving an awful lot of the business,” Gary Meteer, senior director of Polk’s commercial vehicle unit, told Transport Topics. “The large companies seem to be fairly stable.”
But, he added, the “big guys are fighting for the tonnage that’s there.”
Fleets overall grew larger, despite a 22.8% decline in the number of new Class 8 truck registrations, to 52,593 units, Polk said in its report.
At the same time, the number of used Class 8 trucks registrations fell by 3% in the first quarter of 2007 to the lowest level in the past five quarters, Polk said.
Polk reported a more pronounced decline in the number of new registrations in Class 8 trucks from large fleets. Fleets with 500 or more vehicles tallied a 33.2% drop in new registrations during the quarter, but new registrations by fleets with fewer than five vehicles slipped just 4.7%.
“While a number of large fleets have made specific comments about their intentions to purchase units powered by the 2007 diesel-compliant engines, it appears that there is a wait-and-see position by many others,” the report concluded.
Through the first five months of 2007, truck makers sold 76,643 Class 8 units, down from 114,969 trucks through the same period in 2006.
Polk’s first-quarter report showed fleet size has been growing since the end of the third quarter of 2006. With 161,000 more heavy trucks on the road in the first quarter of 2007 than in the first three months last year, the number of trucks in service has increased by 59,000, or 1.7%, since the end of September 2006.
Meteer said it was ironic that the primary fears that have kept carriers from purchasing 2007 engines — that ultra-low-sulfur diesel would not be available and concerns about engine performance — have not really come true (see story, p. 1).
Meteer said predominantly small carriers have been buying new equipment. “The small local, regional or even state business is pretty good,” he said. “They’re the ones buying the new equipment because they have the
contracts.”
The continuing fleet expansion may exacerbate overall capacity issues noted by speakers at a Bear, Stearns & Co., Global Transportation Conference in May (5-14,p. 1).
One of the speakers, Eric Starks, president of freight forecasting company FTR Associates, said the U.S. was in a “freight recession,” exacerbated because fleets overbought as many as 110,000 tractors last year.
James Meil, Eaton Corp.’s chief economist told the conference audience, “There are 120,000 trucks too many right now” on the road, and about 7% of the U.S. and Canadian fleet is currently underused.
Truck tonnage in the U.S. dropped in April, the ninth time in the past 10 months, according to American Trucking Associations.
Meteer said that 16,371 Class 8 new registrations for April 2007 — numbers not included in the first-quarter report — showed the declining number of new Class 8 registrations is continuing.
Polk projected that new class 8 truck registrations will fall 30.2% to 185,500 by the end of 2007, a drop of 80,500 from last year’s total of 266,000.
Meteer expected some carriers to postpone buying new trucks “as long as they can,” he said, but most will have to purchase new equipment by the end of 2007 or sooner.
The trend “is consistent basically with what we’ve been seeing and what we’ve been expecting, and that’s a drop-off in Class 8 orders,” David Ross, a less-than-truckload analyst for Stifel, Nicolaus & Co., told Transport Topics.
“It looks like the larger fleets have a more severe dip year-to-year . . . in terms of new orders because they have better balance sheets and were able to pre-buy and really sit out this year while the engines are working out the kinks,” Ross said.
Some of the conclusions in the Polk report were echoed in a PHH FirstFleet survey of 67 mostly private fleet managers. The June 11 survey, commissioned by PHH and conducted by Starmark/MARC USA Research, concluded that the most private fleet owners and managers are delaying 2007 engine purchases.
Alex Popov, PHH’s vice president of fleet services, said the survey showed that fleets have a “wait-and-see mentality” and that the uncertainty “is scaring them.”
