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How Bad Can It Really Get?

This has been one long, cold winter for truck makers.




This has been one long, cold winter for truck makers.

For many fleets and owner/operators on either side of the border there is just little reason to buy right now.

US truck tonnage did spike 3% in January but that’s not saying much considering how weak December’s numbers were.

Placed in proper perspective, January’s tonnage “spike” is actually a 10.8% drop when compared to the previous January.

It was also the second lowest tonnage total since October 2002. Industry forecaster FTR Associates expects US trucking activity to continue its steady decline with loadings forecast to drop another 10% over the next several months and be off by more than 7% in 2009.

That represents more than a doubling of the drop-off forecasted just a couple of months ago.

There’s not much better news this side of the border.

When the Ontario Trucking Association polled trucking companies at the start of the year it found 51% of fleets were pessimistic about overall industry prospects over the next three months, which was up sharply from the 34% who expressed pessimism in the same survey in the fourth quarter of 08.

Seventy-four per cent of respondents said they are experiencing declining freight volumes, compared to just 52% of respondents in the previous survey. Sixty-one per cent said loaded miles are decreasing, up from 36% in the fourth quarter.

On southbound lanes into the US, 82% of respondents said volume was down, compared to just 51% in the last survey.

The survey suggested the industry is expecting a freight recession to continue for at least into June.

The OTA survey suggests trucking companies are parking trucks to cope with decreased demand – 45% of respondents said capacity has been reduced in their segment and 53% said they expect to see further capacity reductions over the next six months.

Sixty-seven per cent of respondents said they would not be adding tractors to their fleet and 23% said they’d reduce their fleet size.

South of the border, despite all the bankruptcies of the past year, FTR’s forecast has capacity utilization staying below 70% through the third quarter of 2009.

With such dismal performances and expectations by North American carriers it’s no surprise that net orders for all North American truck OEMs fell to 6,167 units in February -a further 21% decline from anemic January and a whopping 60% decline since last February. (The number includes orders in the US, Canada and Mexico as well as exports).

There should be hope the stimulus packages offered by the federal governments in both the US and Canada will help kick start the economy; if they fail, it will be time to break out the “worst case” scenarios.

-Lou Smyrlis can be reached by phone at (416) 510-6881 or by e-mail at lou@TransportationMedia.ca.


Truck News

Truck News

Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry.
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