ACT Research sees an increase in active truck capacity this year, in terms of the numbers of Class 8 tractors, the first since 2007. By any measure, truck capacity is down significantly from its pre-recession peak, so the forecast is good news for shippers.
It’s not much of an increase, just 1 percent to 1.5 percent — about 32,000 tractors, maybe. But, hey, we’ll take ’em.
Measuring truck capacity — the actual amount of cubic footage available to move freight over the highways — is not as simple as counting trucks. Capacity could also be measured in terms of available truck drivers, and with tighter hours of service rules shortening the driver’s work days, capacity should be measured in time, too.
Let’s not get started on trailer dimensions.
When it comes to capacity, not all tractors are equal. Some tractors, said Kenny Vieth, ACT president and senior analyst, provide more actual capacity than others. Those 32,000 new Class 8 tractors, for example, will offer much more capacity in real over-the-road terms than 32,000 2006 model year trucks. The reason lies in how tractors are used as they get older.
In a study, ACT Research found the annual mileage run by a tractor drops off quickly as the equipment ages and is passed from its first purchaser to subsequent owners. “Young trucks are running 100,000 miles a year,” Vieth said in an interview. “The first owners are the high-mileage fleets that only keep a truck three to four years, because then it has 400,000 miles.”
When the truck is sold to a second owner and then a third owner, “you start seeing a fairly rapid decline in the number of miles that truck runs per year,” Vieth said. “Maybe the second owner keeps it four or five years and drives the truck 50,000 miles a year. Then the next owner runs it 10,000 miles a year.” Meanwhile, maintenance costs rise, which means more downtime.
So, take two trucks, one a new Class 8 tractor, running 100,000 miles a year nationwide, the other a 2006 Class 8 running 50,000 miles a year in regional lanes. Do they provide equivalent capacity? As truck owners hold onto vehicles longer before trading them in, spending more money and time on maintenance and repair, does the “capacity value” of those trucks drop?
Typically, as trucks age, they are shunted into what Vieth called “the secondary economy.” Today there are more older trucks “on the frontline of the economy because the new ones cost so much,” he said, as rounds of emissions regulations push truck engine prices higher.
Vieth estimates there are 2 million active trucks hauling freight on U.S. highways, “but there are a lot of guys still driving trucks they purchased in 2005 and 2006.” ACT defines active trucks as those 15 years old and under — whether they’re hauling high-value goods or scrap metal. ACT puts the total tractor population at 3.1 million, which includes 1.1 million “inactive” trucks.
“There are about 600,000 Class 8 tractors on farms across the U.S., and they’re probably running maybe a month a year. Most of the time, they’re parked,” he said. “We use 15 years as a yardstick. Any truck that’s more than 15 years old probably isn’t doing a lot of work.”
The average age of the active tractor fleet — those under 15 years old — was 5.9 years at the end of 2013, up from 5.6 years in 2006, Vieth said. But the average age of the total tractor population — active and inactive — is 9.8 years, up from 8.6 years eight years ago.
“We’re looking more and more at the average age for the total tractor population, because just talking about the active population makes the average age appear to be substantially younger, when actually 16- or 17-year-old trucks are still out there,” and probably getting as much use as when they were 13 or 14 years old, he said — which isn’t much. “That’s the problem.”
New trucks, then, even replacement models that don’t add to fleet truck counts, effectively increase real capacity, as they’ll spend more time on the road than older tractors. Those older tractors then move to the secondary economy, pushing out even older trucks. ACT expects new Class 8 sales to reach 222,000 this year, including about 190,000 replacement trucks.
The large number of older trucks still on the roads, however, effectively cuts into the capacity shippers will need as the U.S. economy begins to grow at a steadier, faster pace.