Close Correlation of Class 8 (Heavy Duty) Truck Sales and the Price of Diesel Fuel

[Anonymous]

In the department of the counter-intuitive:

U.S. retail sales of Class 8 trucks in September jumped 44.5% over the previous September to the highest total in more than four years as buyers added capacity to meet strong demand, replaced aging vehicles and accelerated purchases ahead of higher price tags coming in 2007 when new emission regulations begin.

For the first nine months of the year, big-rig sales were up 43.1% over the same 2003 period to 144,059 units, Ward’s Communications said.
September’s total of 18,642 units was the highest since June 2000, according to Ward’s. It was the eleventh month in a row sales increased over the previous year.

Truck makers and analysts said there was resurgence in purchasing across all segments and all customer types.

Source: Transport Topics, October 18, 2004

I was privy to a study done circa 1990 which concluded that the price of diesel would have to reach $3.00 per gallon to have meaningful modal share impact. I suspect if up-dated, the study would suggest $4.00 per gallon as a tipping point today.

[M636C]

Is it possible that as the cost of fuel rises as a proportion of working expenses, that new vehicles with more power but greater economy are being purchased in greater numbers? It would certainly be time to replace two stroke Detroit engines with more modern alternatives.

Owner drivers are having a hard time in Australia where a few freight forwarders control the business, and there must be easier ways to earn a living!

But every night the one (partial) interstate highway in Australia, Sydney to Melbourne is just crowded with trucks, often in groups of up to five running together, and often above the speed limit.

Peter

[MP173]

***:

All, well almost all trucking rates are tied to fuel prices today with fuel surcharges. Therefore, a spike in fuel prices automatically kicks in an increase in the fuel aspect of the cost component.

I think the truckers are looking to lock in today's technology with the new engines around the corner, plus there was a lull in truck purchases around 2000, so the normal cycle of four years applies here.

Truckers would add capacity, but there is a severe shortage of drivers. Hence, the intermodal traffic levels should increase.

On a local personal note, yesterday's NS 230 was almost 11,000 feet in length and NS ran a second section I30 last night. They also ran two sections of the NS261 Roadrailers the last 10 hours.

It seems the normal year end push is on, no doubt fueled by tight trucker supply.

ed

[Anonymous]

QUOTE: Originally posted by Dick_Lewis

In the department of the counter-intuitive:

U.S. retail sales of Class 8 trucks in September jumped 44.5% over the previous September to the highest total in more than four years as buyers added capacity to meet strong demand, replaced aging vehicles and accelerated purchases ahead of higher price tags coming in 2007 when new emission regulations begin.

For the first nine months of the year, big-rig sales were up 43.1% over the same 2003 period to 144,059 units, Ward’s Communications said.
September’s total of 18,642 units was the highest since June 2000, according to Ward’s. It was the eleventh month in a row sales increased over the previous year.

Truck makers and analysts said there was resurgence in purchasing across all segments and all customer types.

Source: Transport Topics, October 18, 2004

I was privy to a study done circa 1990 which concluded that the price of diesel would have to reach $3.00 per gallon to have meaningful modal share impact. I suspect if up-dated, the study would suggest $4.00 per gallon as a tipping point today.

I think the fact that interest rates are starting to increase has set off a round of buying. People/companies are trying to get the best price possible before any additional increase take effect.

[nslakediv]

I work for a trucking company and we made our first set of new purchases this year, first time we bought new equipment since 2000. low intrest rates coupled with aging equipment and rising labor cost for fixing aging equipment have finally swayed the bosses to go for it. another thing is customers are starting to return to paying for service rather than finding the cheapest hauler. this will last for the next 4-8 years and it will turn again. one thing is true and the class A CDL driver is in the highest demand that i have seen in 15 years. our recruiter is fighting tooth and nail to keep trucks full of drivers. I see about 30 drivers a day im my facility here and the majority of the drivers are from other countries and canada. Some of them are vey hard to communicate with. thats what its coming down to though.

[edbenton]

Another reason for the spike insales is also the new EPA regulations that take effect next March 1st which requires even more reductions in emissions for trucks the railroads thought tier 2 was tough try the ones for OTR trucks for next model year 2006 the new NOX standard is .01 grams per hour and particulates are only allowed .02 grams per hour with the smae reductions in CO and other emissions the only way the engine manufactors are going to make it is to put aftertreatment devices aka catalitic convertors and EGR valves on the engines which means losses in economy the current crop of trucks can get roughly 6.5 MPG when the new standards go into effect it will lower it to around 5.5 MPG plus there is added maintanice costs envolved plus lower power output

[broncoman]

The thought of having to clean out an exhaust afterburner once a year is bad, let alone the fact that California will be making it mandatory to retrofit to some older trucks. Maintenance costs will become a big issue in the years to come.

[MP173]

Ironically, I had an appointment with a customer today and during our meeting he took a call from a diesel engine manufacturer which I wont name but is named after a major US city.

My customer proceeded to tear into the representative about the unreliability of the engines (less than one year old) and then discussed the EPA mandates and the upcoming mandates. The new engines are having problems and the anticipation is the newer engines will even by worse.

Truckers are smart...they allow someone else to test the equipment. They are making their purchases now in anticipation of further problems with the newer engines.

nslakediv...I agree from what I see. Entire companies are being staffed with drivers of an ethnic background, usually Eastern European. The communications is a challenge. I was in a company last summer in which the only English spoken was the "F" word, at which everyone would then start laughing. Then everyone would start screaming the "F" word and laughing.

It was kinda surrealistic.

[broncoman]

QUOTE: Originally posted by MP173


nslakediv...I agree from what I see. Entire companies are being staffed with drivers of an ethnic background, usually Eastern European. The communications is a challenge. I was in a company last summer in which the only English spoken was the "F" word, at which everyone would then start laughing. Then everyone would start screaming the "F" word and laughing.

It was kinda surrealistic.

It seems the truck drivers ethnicity seems to be based on origin, california it seems like there are more middle eastern/indians, I am assuming MP 173 that you are on the east coast? It is so nice to get to talk to long haulers from the southern states as they still speak english.

[MP173]

broncoman:

no I am in Northwest Indiana, but the driver situation I am talking about is in Chicago.

There are many trucking companies in Chicago which are Polish, Bulgarian, or other. The owners start with a few trucks and keep growing.

These drivers are long haul drivers, seldom Teamster, and work on a mileage basis.

ed