Editorial: What Goes Up . . .

This editorial appears in the June 13 print edition of Transport Topics. Click here to subscribe today.

In many ways, this should not be a surprise: After several years of scorching new-truck sales, the market is rapidly cooling.

Two research firms reported that new orders for Class 8 trucks were down about 30% year-over-year in May, continuing a recent trend. ACT Research reported that May’s orders were the second-lowest order volume since July 2012, while FTR said the past three months of order activity annualizes to 175,000 units compared with the past 12 months at 231,000 units.

As a result, Daimler Trucks North America and Volvo Trucks North America have announced another round of worker and production cutbacks.

“It’s by now very clear that the industry is managing through a period of excess inventory and reduced demand. And we’re seeing that softening particularly in the longhaul segment,” VTNA spokesman John Mies said.

Even Navistar International, as it reported its first quarterly profit since its fiscal third quarter of 2012, said it was not immune to the current environment.

In comments on the results, CEO Troy Clarke said the company had “to address what we and everyone else in the industry is seeing: much more difficult industry conditions than anyone anticipated.”

Adding to those difficult conditions are fuel prices that continue to rise. And while there is no direct link between the two, the fuel-price increases do place an additional burden on the industry.

The U.S. retail diesel average climbed 2.5 cents to $2.407 last week, the Department of Energy reported. While still well below the year-ago price, it was the 15th increase in 16 weeks. The average price for regular gasoline has been rising at a similar clip in recent months, and crude oil rose above $50 a barrel for the first time since July last week on the New York Mercantile Exchange.

Although fuel surcharges built into contracts help cushion the blow from fuel-price spikes, they usually are adjusted on a weekly — or even monthly — basis. That means truckers often face losses as prices go up in between surcharge adjustments.

Likely, none of this requires a panic. Trucking is cyclical in nature and things still look pretty good right now, compared with other years earlier in the century.

However, along with a sluggish freight market and an uncertainty surrounding our choices for the next president of the United States, it may make for a bit rockier summer than many of us had sought. Here’s hoping things will be looking brighter come Labor Day.