Class 8 pre-buy boosts 2009 truck demand
Nov 1, 2009 12:00 PM, By Charles E Wilson
IT LOOKS like we are in the midst of a modest pre-buy in advance of the 2010 truck models with diesel engines that meet the Environmental Protection Agency's (EPA's) 2010 emission requirements. Class 8 net orders for all major North American truck builders totaled 21,792 units in October, reflecting a clear surge in order activity, according to FTR Associates data.
October's order volume increased 104% over September and 117% year over year. For the three-month period (August, September, October), manufacturers received Class 8 truck orders at an annualized rate of 172,300 units, a substantial improvement over early 2009.
“All indications are that the October increase is due to the filling up of remaining 2009 production slots for trucks with the older 2007 engine technology and to avoid the new 2010 engines, which due to tighter emission standards will be more expensive and will employ new technology,” said Eric Starks, FTR Associates president. “Significantly, the order activity was broad-based among the OEMs (original equipment manufacturers) from fleets of various sizes and did not appear to be dealer restocking. We are encouraged that fleets have developed enough confidence in the economic recovery to make such commitments at this time. However, we believe this is a temporary situation that may actually take orders away from early 2010.”
New technology and higher truck prices certainly could affect demand in 2010. FTR Associates projects depressed demand for new Class 8 trucks until at least the second half of 2010. Vehicle prices and new technology are only part of the reason, though.
Freight shipments (including liquid bulk cargoes) have shown some improvement in recent months but remain depressed overall. Truck fleets across the industry have downsized, laying off 91,000 employees since 2008 (6.8% of the workforce) and parking thousands of tractors and trailers.
Average miles per truck dropped by nearly 23% over the past year. The lower mileages will extend trade cycles by at least a year for many fleets.
Across the trucking industry, the current tractor fleet is the oldest it has been since 1986, according to Ken Vieth, ACT Research Company. The average age for the US Class 8 fleet is now 6.4 years. Even with the Q4 2009 pre buy, the average age for the Class 8 fleet could reach 6.6 years by the end of 2010.
That said, many tank fleet managers that spoke with Bulk Transporter over the past couple of months have indicated that they will buy at least a few new trucks during 2010. These vocational fleet buyers feel it is important to stay on track with their scheduled vehicle replacement programs.
How many they buy depends in large part on the economy. Certainly there are signs of improvement. Factory orders rose 0.9% in September, the fifth increase in six months. Bob Costello, chief economist for the American Trucking Associations, suggested in October that the economy finally had bottomed out and was moving in the right direction. Freight tonnage and revenue improvement will be slow and choppy, though.
That is actually one of the most optimistic economic assessments the trucking industry has heard this year. Along with the truck manufacturers, we have to hope that the good news continues and that it stimulates demand for new equipment.
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