U.S. Class 8 Fleet Expands

This story appears in the March 4 print edition of Transport Topics.

Growth in the nation’s heavy-duty truck fleet firmed in the fourth quarter and at the same time many of the oldest trucks — those made before 2000 — were purged, according to a report from R.L. Polk & Co.

Class 8 vehicles in operation rose 1.3% to 3.54 million during the last three months of 2012 from the fourth quarter of 2011.

Though slight, the gain signals that recession-induced downsizing appears to have hit bottom during the third quarter of 2011 at 3.49 million U.S. Class 8s. That’s down from a peak of 3.65 million at the end of 2008.

Polk’s report also said registration of all new U.S. commercial vehicles — Classes 3-8 — grew by 15.8% in 2012, but the growth weakened as the year progressed.

“The vehicle population is growing, but it’s replacement of older vehicles with a little uptick here and there,” said Gary Meteer, Polk’s director of aftermarket and commercial vehicle data.

Classes 8 and 5 grew the most, by 20.4% and 25.8%, respectively. Classes 6 and 4 were the only groups that failed to hit double-digit growth, at 7.9% and 9.9%.

Heavy-duty vehicles in operation grew, year-over-year, in each quarter during 2012 except for the period of April through June.

Registrations of trucks made prior to 2000 contracted to 38.9% of the nation’s fleet in 2012, down from 49.5% in 2009.

Meteer described the current sales environment as mixed.

Registration of new U.S. heavy-duty trucks grew through October 2012, but declined in November and December on a year-over-year basis. The registration data are consistent with U.S. retail truck sales, which grew through August and have since been in decline.

Meteer said he expects the recent contraction to be temporary, and that this year will ultimately feature growth in new heavy-duty registrations over the 2012 level of 194,700 vehicles, or 20.4% more than the 161,800 in 2011.

“How many trucks you had used to be part of who you were, but now we’re all more focused on the bottom line [net income] rather than the top line [revenue],” said Tom Kretsinger Jr., president of American Central Transport, based in Liberty, Mo.

Next in line to become chairman of the Truckload Carriers Association, Kretsinger said the aftermath of the recent recession still grips fleet executives powerfully.

“I have no focus at all on growing the asset side of my business. Most carriers are not looking to expand, although there are some exceptions,” Kretsinger said.

The Polk report said large fleets, with 500 or more commercial vehicles, controlled 35% of the nation’s trucks in 2012, down from 37.9% in 2011. In contrast, small fleets with one to five trucks grew to 33.7% of the nation’s trucks from 31.2% in 2011.

Meteer said he thinks large fleets are trying to cultivate growth in owner-operators, and Kretsinger agreed.

“There is a trend among fleets to have a bias toward the owner-operator model,” said Kretsinger, whose fleet is 65% owner-operators and 35% company drivers.

Kretsinger said his company has a lease-to-own program to get owner-operators into used trucks. These programs have become an important new source of trucks for owner-operators, he said, giving would-be independent contractors an alternative to dealerships.

Private fleets are also moving cautiously, said Gary Strausbaugh, vice president of transportation for the Mennel Milling Co., in Fostoria, Ohio. Also chairman of the National Private Truck Council, he said he has seen some private fleets switch to dedicated contract carriage with for-hire carriers, while others are expanding to better meet customer needs of the manufacturers, distributors and retailers that run the private fleets.

“There is some expansion, but it’s being done conservatively and only where it really makes sense,” Strausbaugh said, adding that at his company he is pruning older vehicles and replacing them with newer, more fuel-efficient tractors with automated manual transmissions.

In Canada, the market for new commercial vehicles was stronger than in the United States, with the 2012 figure approaching 82,000 new Class 3-8 trucks, making it the third best year ever for the northern nation, the Polk report said.

Growth in Class 3-8 registrations of 11.6% to 81,856 commercial vehicles compared with 73,346 in 2011. But the 2012 figure was about 1,100 units short of the 2006 record.

Class 8 registrations grew even faster, by 19.5% to 32,830 for the year, Polk said.

Michael Hatch, chief economist for the Canadian Automobile Dealers Association said, “We [in Canada] didn’t fall off the same cliff as in the United States.”

He said the drop in Canadian vehicle sales due to the recession there was about one-third the size in percentage terms of the United States. Therefore Canada has been able to come back to normal more quickly, he said.