ATLANTA, Ga. (Jan. 17, 2005) — The trucking industry may be facing an equipment crisis, Eaton Chief Economist Jim Meil told carriers & shippers at The Freight Transportation Capacity Summit in late 2004.

Per the ATA Tonnage Index, freight volume has increased 61 per cent in the last 10 years. After declines in 2000-2001, volume has grown an average 5 per cent from 2002-2004.

But the fleet has contracted. Eaton estimates that NAFTA population of first use Class 8 trucks went from 1.58 million in 2000 to 1.35 million in ’04 & the heavy-duty fleet is the oldest in 15 years.

Capacity utilization is close to 100 per cent. “It’s going to take a big year in ’05 and ’06 to get it right,” Meil said, estimating current replacement demand is 250,000 units a year. Freight growth is expected to slow some in ’05 but still be another big year, which could push capacity expansion demands to 60,000 units. Bottom line: Total demand for new class 8 trucks in ’05 could reach 310,000 units, up from a projected 255,000-unit production in ’04.

Until recently class 8 demand cycles have been driven mainly by the economy but, as we saw with the ’02 pre-buy, regulations can play a big role. Stricter emissions standards for ’07 and 2010 could likely mean more pre-buys, thus increasing market volatility, Meil noted.

“These forces put distance between annual demand & the ‘sweet spot’ for the supply side of about 260,000 a year. It will be a struggle to cost-effectively get capacity right-sized,” he said.

— from Heavy Duty Trucking