Truck, trailer and freight demand all to remain strong: FTR
“We need trucks on the road, the market is desperate for trucks, and we can’t get them.”
That was how Don Ake, vice-president – commercial vehicles with industry forecaster FTR characterized the current commercial vehicle market. OEMs have filled their 2021 build slots and haven’t yet started taking orders for 2022, due to uncertainty about commodity prices, Ake explained.
Meanwhile there are 20 to 40 components and materials needed to build trucks and trailers that are in short supply. “We’re stuck in the worst supply chain environment since the end of WWII,” said Ake.
Lumber, steel, aluminum, microchips, plastic and rubber are among the shortages, and as a result, prices are climbing. Ake pointed to the Trailer Producer Price Index as an example – it jumped 5.6% last month, reaching a new all-time high and is “probably going higher,” Ake said.
Class 8 orders slumped to 23,600 units according to preliminary data for May, but Ake said the decline is a reflection of supply, not demand.
“We would expect these orders to continue to fall back to seasonal trends until the [2022] order boards are opened up, but then we’re going to have an interesting situation,” said Ake. “There’s all this pent-up demand, fleets can’t get the trucks they need this year, they’re going to be afraid of shortages next year. We anticipate once the OEMs open the order boards up, we’re going to see very impressive order totals.”
The supply chain issues plaguing truck and trailer OEMs eased in March before resurfacing in April. Class 8 retail sales are slumping due to lack of inventory.
“There’s not trucks available for sale,” said Ake. “Sales are being restricted due to production being restricted.”
“This is just a very bizarre position where you have this strong demand matched up with constricted supply.”
Don Ake, FTR
The same story is true of trailers. Orders have declined, but Ake said that “has nothing to do with the strength of the market, it’s the available build slots.”
Several van trailer OEMs are fully booked this year and like the truck OEMs, reluctant to take orders for 2022 given the uncertainty around material prices.
Looking ahead, FTR says any 2021 orders that can’t be filled this year will spill into 2022, creating a very good year for OEMs. Ake said 2022 and 2023 will be great years for truck and trailer suppliers, perhaps even record years for trailers.
“This is just a very bizarre position where you have this strong demand matched up with constricted supply,” Ake said.
The freight outlook
The demand for new equipment isn’t expected to peter out soon. Avery Vise, FTR’s vice-president – trucking, reported U.S. GDP related to goods transport will grow 15.9% in the second quarter. The U.S. spot market reached record volumes about a month ago, according to Truckstop.com.
“Spot rates keep rising,” said Vise. “We’ve seen no signs at all of weakness in spot rates.”
FTR is projecting total truck loadings in the U.S. to be up 8% this year as a whole, and about 6% for the remainder of the year. Dry van will lead the way with 10% growth. Next year, Vise said loadings will likely grow another 3.6%, with all segments seeing 3-5% growth.
“Solid freight volumes appear to be a foregone conclusion this year,” Vise said.
He’s also projecting improving rates, with truckload rates climbing about 16% this year and spot market rates soaring more than 20%. Contract rates are up about 12% this year, Vise said.
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Trucking wasn’t so strict before as it is now. I mean come on it’s trucking, it’s not a college degree type of deal it’s a lifestyle. The reason why nobody wants to do it anymore is because it’s not worth it anymore. Not to mention those schools that only take 4 weeks and 21 years old….that is insane . I’m dead. I don’t even feel safe to be driving on the road with no crazy stuff like that. Trucks are going to be getting wrecked and a lot of rookies are either going to kill or die or both. All them hours on the road away from family with no social life and then spending like 300$ on food because you’re confined to the truck because of the eld and all that personal conveyance and yard move stuff is drama ,no parking nowhere ,violating and violating , or wasting your time trying to fix it . I got all kinda great hair now All that’s happening is that the buisness is getting so greedy that they don’t care about the most important thing is the driver. If you get a bad driver that don’t know nothing not even how to drive but all he knows is that stupid little eld. Good luck, hopefully the obvious don’t happen like at fault accident, burn up the clutch, burn up the whole thing catching it on fire over a flat or using the brake wrong, not checking the coolant or oil and waiting until they over heat in Tim buck two and need Mobil service . Now you gotta get him a room and all kinda extra shyt the driver will kill your whole buisness if he don’t know how to really drive and if he isnt being paid right. To not pay the driver what he is worth meaning at least pay him 25% at the very very least. Then that’s just like a criminal hanging around with a snitch.
A year ago could by 2 years old tractors and certain types of trailers just over half the price of a new one now. This why we need minimum freight and wage rate and Ont needs to provide medical care and insurance for smaller companies and all truck drivers especially those on T F W Ps . Too many former truck drivers still in Windsor homeless shelters.