Truck Orders Gain 148%

This story appears in the Dec. 13 print edition of Transport Topics.

Orders for Class 8 trucks in North America soared to more than 26,000 in November, jumping at least 148% from a year ago and 38% from October, industry consultants said.

“It is clear that we are in a recovery period for the new truck equipment market,” said Eric Starks, president of FTR Associates in Nashville, Ind., which released preliminary data on orders on Dec. 2.

FTR reported that orders for new heavy-duty commercial trucks totaled 26,005 units in November, the highest number of orders since May 2006.

Separately, ACT Research Co., Columbus, Ind., reported 26,300 November orders for Class 8 trucks in North America, a jump of 148% from 10,600 a year ago.

Kenny Vieth, ACT president, said the November increase followed gains in September and October and was in line with expectations for production this year of approximately 151,000 Class 8 vehicles.

Vieth said his firm has predicted slow economic recovery in 2010, with demand for new trucks “well below replacement” levels, but that demand for trucks will continue to “ramp up” over the next two years, with production in 2012 exceeding 300,000 units.

“What this tells us is that we’re getting back to pre-recessionary levels,” said FTR’s Starks. “What I’ll be interested to see is if we’ll be able to sustain these types of order levels.”

The biggest year ever for Class 8 truck production in North America was 2006, when 376,400 units were made.

Starks said leasing companies and large fleet operators were primarily responsible for the surge in orders in November: “What we are not seeing are the smaller and medium-size fleets participating at the levels we would normally expect during a recovery. Until we see this group jumping back into the market, we will continue to be optimistic, but with a degree of caution.”

Starks said he expects truck production for the year to remain under 200,000 units, which is the level that experts say is normal if fleets are simply replacing their aging equipment.

“The trucking industry is poised and ready for recovery, and all indicators are in place to warrant the uptick in new truck orders and purchases,” said W.M. “Rusty” Rush, president of Rush Enterprises, a truck dealership based in San Antonio that operates across the country.

“The age of the fleet is the oldest on record, repair and maintenance costs for our customers have increased significantly, excess truck capacity has equalized with freight movement and there is pent-up demand resulting from four consecutive years of slow truck sales,” Rush said.

Braxton Vick, senior vice president of corporate planning and development at Southeastern Freight

Lines in Lexington, S.C., said his company is buying new tractors and trailers once again after deferring purchases for several years because of the economic downturn.

“We bought right before the recession and we ended up parking some of those units,” Vick said. “In February 2010 our business exploded and we ate up that capacity. We were able to put all our equipment to work.”

Over the next 12 months, Vick said the company plans to grow the fleet of 2,800 tractors and 8,700 trailers by 5% to 7% as part of an $85 million capital expenditure program that includes additional freight handling facilities in North Carolina, Texas and Florida.

“We’re increasing our fleet to add capacity where we have had a significant increase in business,” Vick said.

Southeastern is a regional less-than-truckload carrier that operates in the South and Southeast. It ranks No. 29 on Transport Topics’ 2010 Top 100 For-Hire Carriers list.

A survey conducted by Transport Capital Partners, a transportation industry consulting firm in Nashville, Tenn., indicated that fleets are shifting to a more aggressive tractor replacement plan.

Four of each 10 carriers surveyed in November said they were planning to replace more than 10% of their fleet. A similar survey in August found three in 10 carriers planning to replace that much equipment.

TCP partner Lana Batts said carriers are able to buy more equipment because profitability has improved and the value of trade-ins has increased, as the amount of used equipment on the market has declined.

“The pool of used equipment has been diminished by exports and scrappage, while fleet utility is picking up,” Batts said.

While many carriers are ready to step up purchases, TCP partner Richard Mikes said the survey also showed that fewer carriers are willing to expand the size of their fleets.

“Carriers have stifled expansion appetites because of increased equipment costs, looming driver shortages and poor financial returns,” Mikes said.

In the most recent survey, 41% of carriers said they had no plans to add capacity, compared with 34% in August.

Staff Writer Dan Leone contributed to this story.