Fleet Execs See Likely Delay of New Truck Buying in 2010

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

NEW YORK — Trucking executives said the uncertainty about new engine technology required to meet federal emissions standards next year would likely keep them from buying many trucks during 2010.

However, when those fleets do purchase new equipment, several said they were likely to choose trucks that use selective catalytic reduction rather than exhaust gas recirculation to reduce nitrogen oxide emissions.

Stephen Russell, chairman and chief executive officer of Celadon Group, Indianapolis, was one of several executives who recently expressed apprehension about the upcoming tightening of emissions by the U.S. Environmental Protection Agency.

“Probably the best investment you could make right now is to buy 2006, 2007 and 2008 trucks and just park them in the desert because, come 2010, 2011, the values of those trucks will go through the roof,” Russell said at the Wolfe Research Global Transportation Conference here.

“We will continue to take delivery of trucks between now and the end of November,” he said on May 19, “and we will purchase zero trucks in 2010 and 2011.”

Russell said issues relating to SCR, which uses urea as part of an exhaust aftertreatment system, and the added cost of the new technology “can be significant.”

Derek Leathers, chief operating officer of Werner Enterprises, said the carrier would be making “little, if any, 2010 truck buys, certainly none in first half of the year.”

Swift Transportation Co. is also planning to avoid purchasing trucks next year, said Chief Financial Officer Ginnie Henkels, who added that the company had “600 trucks parked” and ready, if needed.

“We could probably go 18 months or two years without buying new trucks, but with 2010 requirements, we will be buying trucks at the end of this year,” she said.

Many fleets bought trucks ahead of their normal replacement cycles before the latest round of emission reductions in 2007, but heading into 2010, Swift appeared to be an exception rather than the rule.

Robert Davidson, CEO of Arkansas Best Corp., said his ABF Freight System less-than-truckload carrier is more likely to minimize truck purchases now rather than bulk up on a pre-buy.

Steve O’Kane, president of LTL carrier A. Duie Pyle, said his fleet won’t pre-buy, because it “overbought” during the run-up to 2007.

“Right now, all the pre-buys have been deployed, but we’ve been able to take some 400,000-mile vintage trucks out and put them in reserve, should we need them,” he said.

O’Kane said he wanted to see how the engines work, but if his concerns about urea distribution and fuel economy are allayed, Pyle would likely begin make large purchases of trucks either in late 2010 or 2011.

“If we’re going to go to SCR as the emissions technology,” O’Kane said, “we’ll do a significant purchase by virtue of how we’ve managed the fleet, taking older trucks out, putting new trucks in and keeping older trucks.

“We have a big bubble coming up in 2010-2011,” he said. “We hope there’s evidence that allows us to make that decision in the later half of 2010.”

Most major truck manufacturers, with the exception of Navistar Inc., have said they intend to use SCR to meet EPA’s 2010 standard. Navistar has said it will use a third generation of exhaust gas recirculation.

Of those carriers that said they would buy trucks, most said they intended to test Navistar’s advanced EGR system, but they expected to use SCR-based en-gines, going forward.

“We’re reasonably certain it will be the SCR technology that prevails,” O’Kane said.

Steve Duley, vice president of purchasing for Schneider National, said the truckload carrier has two 2010 SCR engines with nearly 100,000 miles on them, and found the technology to be working pretty well.

Davidson said Arkansas Best has not committed to either platform, but “SCR for us is a lot easier to manage,” because of the company’s network of terminals, in-house refueling and stable driver force.

At CRST International, CEO John Smith said because his main supplier, Freightliner, was going with the SCR technology, he would, too.