DALLAS, Tex. - The slide in North American truck sales is likely to continue next year, says Jim Hebe, president of Freightliner LLC."Is this the end of the truck manufacturing boom? It probably is. T...
DALLAS, Tex. – The slide in North American truck sales is likely to continue next year, says Jim Hebe, president of Freightliner LLC.
“Is this the end of the truck manufacturing boom? It probably is. The laws of supply and demand have not been nullified,” Hebe told trade press at Dallas’ Great American Trucking show in November. He added that some companies are “absolutely sacrificing their futures just to have volumes.”
Hebe predicted sales of 28,000 Class 8 trucks for Canada this year, down 9.5 per cent from 1999, which was a record year. Sales in the U.S. should come in at 205,000, a 22 per cent drop from 1999. He said sales would take an even more significant dip in 2001, with the Canadian market shrinking to 19,000 vehicles and the U.S. market to 163,000.
“We are struggling with some of the more difficult market conditions we have seen in years. A year ago our big concern was production. Today our big concern is how do we sell the trucks we are producing. We probably sold 40,000 more trucks last year than we should have,” he noted. “Put in historical perspective, 2001 will be a respectable year but still very different from what we have become accustomed to in recent years.”
Hebe said the industry is in the rare situation of having traditional problems such as high fuel prices, climbing interest rates, falling used truck values, shrinking freight volumes and increased competition from rail all hitting it at once.
He said that in order for truck sales to pick up, a number of factors have to come into play, including higher freight rates.
“Our customer must make more money. It’s ridiculous that freight rates are lower than 10 years ago,” he said, adding that rates should be 20 per cent higher than they are.
“A little inflation never hurt anybody. It covers up a lot of sins.”
“Why should the whole trucking industry be ashamed to make a little money. Look at what it has done to reduce costs and increase productivity. But you also have to look at what that will do to the competition with rail. Will rail become the more competitive mode for moving long haul freight?”
Hebe predicted that the downward push will last about a year if the economy remains strong; longer if a recession hits. But he said truckers would probably adopt a different attitude with the next upturn.
He said truckers should have realized that their business expanded so rapidly in part because railways fell apart and that it would only be a matter of time before the railways turned themselves around.
“In retrospect, I don’t think I would have done it any different,” Hebe said. n
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. All posts by Truck News