Improving Prospects for 2011

This Editorial appears in the Dec. 6 print edition of Transport Topics. Click here to subscribe today.

The evidence continues to mount that 2011 will turn out to be a pretty good year for the U.S. economy in general and for trucking in particular.

This week we report that even as the total U.S. heavy-duty fleet continued to shrink for the fourth straight quarter, signs of recovery and growth are taking root (see story, p. 1).

Many fleets are reporting improved financial performances, as modest growth in demand, coupled with the decline in capacity, is leading to better business conditions for them.

And, as a result, things are definitely looking better for heavy-duty truck manufacturers and the related supplier community.

The latest data show that Class 8 new-truck registrations grew by 9.6% over the first nine months of 2010, and the flood of used-truck registrations is slowing, now that most of the low-mileage, late models have been snapped up.

The improved business conditions have led ACT Research now to project U.S. production of Class 8 trucks this year will grow by 26% over last year’s level and by 57% in 2011.

One Kenworth dealer told us, “Things are looking better. . . . We’ve been saying this for three years now, but I think this time it’s actually going to stick.”

Last week, R.L. Polk & Co. reported that new trailer registrations surged by 35% in the third quarter versus year-ago levels (click here for related story).

Even more dramatically, trailer orders during October jumped 79% above October 2009 levels.

“The growth is amazing,” said Gary Meteer Sr. of Polk. “The [trailer] industry was almost out of business a year ago.”

Also last week, reports showed that U.S. manufacturing activity continued to expand in November, construction spending grew in October and U.S. productivity growth in the third quarter was revised upward.

Consumer confidence also grew in November, which may be partly responsible for the increase in holiday shopping that most retailers have been reporting since the kickoff of the season on the Friday after Thanksgiving.

Truck and trailer demand is now so strong that some manufacturers say they concerned about whether suppliers, such as tire makers, are going to be able to keep up with their needs, which may spur additional price increases.

After what trucking’s been through over the past two years, dealing with the woes caused by too much demand may offer almost comic relief from a long period of wondering how to survive the period of too little demand.