A steep drop in heavy truck orders could be an early warning sign for shippers enjoying unprecedented pricing power and a glimmer of hope for carriers forced to slash rates to keep freight in their trucks.
According to A.C.T. Research, which specializes in tracking and analyzing the truck equipment market, preliminary orders for Class 8 trucks are down 19 percent between January and February 2009 and down 61 percent compared with the same period a year ago.
“We view the recent low North American net orders as a net positive for trucks as orders are significantly below replacement demand, which over time should help improve the supply-demand balance, working off current excess capacity,” according to a research note by Wachovia Securities.
“The economy is all about freight, so if it continues to shrink, ultimately freight volume is shrinking,” said Ken Vieth, senior partner at A.C.T. “Shippers know this and are forcing carriers to bargain. But if I’m a smart shipper, I realize that when capacity tightens carriers will remember if I tried to be fair with them or not.”