Are trucking companies losing confidence in the recovery and slowing plans to upgrade or expand capacity? There are signs carriers are temporarily throttling back on expansion as they tighten their grip on profits.
One of the clearest signals is a steady drop in net orders for new Class 8 heavy tractors. Net orders for Class 8 tractors have been slipping since December, when they hit a six-year peak, according to ACT Research. In March, net Class 8 orders are expected to fall short of 20,000 units, making March the weakest month for orders since 2010. That represents a real check in a rapid build up of net orders for heavy-duty hauling capacity that began last August.
There are several contributing factors to take into account, starting with that big run-up in demand. Class 8 net orders leaped 71.7 percent in 2011 and were up 47 percent in December at 30,293 trucks. That surge in truck orders created a 125,000-unit backlog at equipment manufacturers in January. That means additional delay before orders are translated to actual sales and trucks roll from plants to customers.
Freight demand followed a similar trajectory, rising rapidly last fall and dropping in early 2012. For-hire truck tonnage fell 4 percent month-to-month in January after rising 6.4 percent in December, according to the American Trucking Associations. The ATA For-Hire Truck Tonnage Index rose 0.5 percent in February, indicating freight shipping picked up, but only slightly month-to-month.
Trucking companies may be waiting for a stronger surge in freight demand this spring before deciding whether or when to add or replace more trucks.
The most important question, however, is who is going to drive those trucks?
Truckload carriers, in particular, complain about a shortage of available, well-qualified drivers. They also have trouble keeping drivers they hire. Carrier executives often blame supposedly high unemployment benefits, as well as a job that includes long working hours and days spent away from home. Pay is a big part of the issue, however, with the average tractor-trailer driver earning less than $40,000 a year in 2011, according to the U.S. Labor Department.
ACT Research believes the decline in truck orders is a short-term phenomenon related to the post-holiday slip in shipping and higher fuel costs. “Beyond those reasons, actual and anecdotal data that we track continue to be supportive of a healthy Class 8 market,” ACT President Kenny Vieth said.
But clearly, the health of the Class 8 market depends on finding more people ready and willing to take the wheel.