Class 8 Fleet Growth Stagnant In 2nd Quarter, Polk Reports

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Aug. 25 print edition of Transport Topics.

Growth in the nation’s fleet of Class 8 trucks ground to a halt during the second quarter, as U.S. registrations for vehicles in operation rose by just 0.75%, according to R.L. Polk & Co.

As of June 30, the nation’s fleets controlled 3.61 million Class 8 vehicles, up from 3.58 million the year before. Gary Meteer, Polk’s account director for commercial vehicle services, said the increase of 27,000 vehicles nationwide over the course of a year was “mere noise; there was essentially no growth.”

The Aug. 18 report from Polk, Southfield, Mich., also found that used truck sales fell, registrations for new trailers continued to decline and in June there were the fewest new heavy-duty registrations for any month since 2003.

And while the company still predicts that fewer new heavy trucks will be registered this year, compared with 2007, second-quarter registrations were not as low as originally expected.

In addition to highway tractors, the Class 8 Polk data include very large straight trucks, often with dump and cement-mixer bodies, and even some mobile homes.

The Polk report and Meteer both took issue with data from WardsAuto.com, which tracks U.S. retail truck sales. Ward’s said Class 8 volumes rose in June and July by 9.5% and 10.8%, respectively, over very easy year-over-year comparisons (8-18, p. 3).

With 9,581 U.S. registrations in June, it was the lowest monthly level of Class 8 activity since 2003 and 32.5% less than in the same month in 2007.

“There’s no indication that the bottom’s been reached in this downward spiral,” Meteer said.

Regardless of the precise number of new trucks, the broader issue for the transportation industry is one of freight-hauling capacity. Stock analyst Donald Broughton said a first-half surge in U.S. motor carrier failures trimmed capacity by about 4.5% in just six months (8-11, p. 1; click here for previous Premium Content story).

Third-party logistics provider Transplace Inc. saw a tightening in capacity in June and a relaxing in July, which is typically a slow month for freight. Kyle Alexander, the company’s general manager of strategic development, said he expects more tightening to occur through September.

“August and September will be a muted peak season because the economy is weak,” he said. “This year will again be like 2006 and ’07, rather than 2004 and ’05.

“We’re sourcing transportation now without too much difficulty, and we expect that to continue if there’s slow and incremental improvement in the economy, but if there’s a sudden spike in demand [for trucks], then all bets are off,” said Alexander. He added that the truckload market is what has become incrementally more difficult.

“There’s still plenty of less-than-truckload capacity in the marketplace,” he said.

“Supply and demand are closer to being in balance than they were six months ago,” said Bob Costello, chief economist for American Trucking Associations. In a continuing survey of for-hire fleets, he said he found tractor counts were pared by 2.6% in 2007 and another 1.3% during the first half of this year.

“That’s among surviving businesses and doesn’t include the bankruptcies,” Costello said in an interview. “Truckload fleets have been shrinking for 1½ years, and they’re rightsizing themselves for the amount of freight that’s out there now.

“It won’t take much of an increase in demand to create a much tighter market [for tractor-trailers],” Costello said.

Looking at other trucking equipment, Polk said 77,200 new trailers — pup trailers and full-size — were registered during the first six months, a 33.7% decline from the 116,500 registered during the same time in 2007.

New flatbed registrations were off even more, by 45.5%.

Based on a study of recent patterns, Polk predicts that 129,000 new U.S. Class 8 vehicles will be registered this year, compared with 169,600 in 2007. The new projection is an adjustment up by 3.2% from the 125,500 units it had predicted in May after looking at first-quarter registrations.

“Although second-quarter registrations were bad during the second quarter, they were not as bad as originally anticipated,” Meteer said of the adjustment.

The Class 7 projection also was moved up by 2% to 56,000 units for the year. However, projections for the four classes from 3 to 6 were all adjusted downward.

Polk also analyzed registrations by fleet size and found the very smallest fleets are cutting back the least on the number of new heavy trucks being registered.

For the first half of this year, registration of new Class 8s dropped 36.3% overall from the pace last year. Among the smallest fleets — of one to five power units — they cut back on their registrations of new vehicles the least, by just 26.6%.

Assessing buying habits, Meteer said heavy-duty truck owners are “freshening their equipment only when they get new contracts. They want to make sure every vehicle they buy, new or used, will be used.”