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CTEA – Outlook for 2003

TORONTO, Ont. - Is there a silver lining on the horizon for the North American commercial vehicle industry?This was the topic of keynote speaker, Ken Vieth's, presentation at the 39th annual Canadian ...

TORONTO, Ont. – Is there a silver lining on the horizon for the North American commercial vehicle industry?

This was the topic of keynote speaker, Ken Vieth’s, presentation at the 39th annual Canadian Transportation Equipment Association (CTEA) manufacturers’ conference held Nov. 3-5 in Toronto.

Vieth, principle for Americas Commercial Transportation Research Co., LLC, says that a year ago he predicted 2002 would be a long year.

“One year ago, I stood here and predicted what I thought this past year would have in store for us, and I was right,” says Vieth.

“I figured we would see very few positives for Class 8 truck demand, trailer recovery would likely precede the Class 8 recovery and this recovery would be unlikely before Q3’02. I was pretty well on the mark.”

In terms of what to expect for this year, says Vieth, it will be a similar scene.

Freight challenges

“We have to think of what kind of products we are going to manufacture as we move into the next 20 years which will be challenged by freight,” he says.

“How will we move freight and keep just-in-time shipping because the truck traffic is expected to increase in leaps and bounds by 2020?”

The traffic bottlenecks that we experience every day are not going away very quickly, and they are going to continue to expand if there are no plans for the future management of moving freight, Vieth says.

He also adds, the idea of intermodalism to help relieve the trucking industry appears to sound like a viable option but it isn’t.

“Rail can’t do anything on time, and this isn’t a criticism, it’s a fact. We need the precision, timing and productivity of truck freight,” says Vieth.

There are many inhibitors to moving freight that truckers have to contend with, says Vieth, and the industry must start to extend its bigger picture even further.

Manufacturing outlook

“Obviously rising fuel costs, EPA guidelines and low freight rates are roadblocks for truckers,” Vieth says, “but one of the bigger indirect roadblocks are the market trends in manufacturing, because manufacturing is a key ingredient.”

Vieth forecasts that 2003 will not be a boom year. He says there may be a slight bump up in demand but then it would hold at that rate.

“I am not hearing many expressions of interest in new products over the next little while,” he says.

Truckers can’t afford to trade their trucks in after one or two years anymore, says Vieth.

Manufacturers have lengthened their trade cycles by anywhere from four months to a full year.

According to Vieth, even the used market looks grim for the upcoming year.

“Since the guarantee buy back phase in 1996 has fizzled, there were 150,000 extra Class 8 trucks sitting on lawns in 2001, so the prices and values have deteriorated. With the infusion of new trucks and new engines, we won’t have much of a used program for a little while,” Vieth says.

However, Vieth adds, when the economy finally comes around, recoveries in trucker profitability and demand will be strong.

As long as no new hindrances are introduced to the trucking industry, he adds.

“Although it is not a really good picture for the year ahead, if we can keep plugging away,” Vieth says, “things will improve.”

So there is a silver lining for the trucking industry, says Vieth, but perhaps not right now.

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