Trying to Make Sense of it All - Tire Review Magazine

Trying to Make Sense of it All

[Editor’s Note: This column by editor Carol Birkland appeared in the November 2013 issue of Fleet Equipment magazine, a sister publication of Tire Review.]

Current economic and legislative concerns may be blamed on a perfect, albeit negative, alignment of the stars. We all know that the economy needs to be strong to fuel consumer confidence. Without it, goods aren’t purchased or shipped. Sluggish shipments means trucks are sidelined — and there’s no need to buy new equipment. This is all fairly predictable and reflects cycles the trucking industry has experienced before. Nonetheless, we are again grappling with the challenges.

As 2013 began, truck sales kept a modest pace. Mid-year we heard new trailer builds were improving. Then in September, U.S. retail Class 8 truck sales rose for the first time in 13 months, gaining 11.3% from a year earlier for a total of 16,125 vehicles. September marked the first time sales topped 16,000 since August 2012, which also was the last time sales posted a year-over-year increase. 

The sales growth was broad-based, as all but one OEM brand showed gains in September — there were several with double-digit growth. Month-to-month, sales rose 5.5% from August’s 15,288, but year-to-date sales of 132,593 trucks are down 9.6% from the 2012 figure. 

Martin Daum, president and CEO of Daimler Trucks North America, recently commented that Class 8 truck sales for 2013 in the U.S. would likely be about 5% lower than previously anticipated. He stated, that normally we need to see yearly Class 8 truck sales of 375,000 units to keep fleets from hanging on to aging equipment. Currently, we are at about half that anticipated number. He added, that there is nothing bad about a stable market, since it may be an indication that vehicles are lasting longer.

While truck makers are seeing a flat growth period, fleets are dealing with driver shortages and government mandates. Schneider National recently reported that the Hours of Service ruling, which went into affect July 1, caused it to see a 3.1% drop in productivity on solo shipments and a 4.3% decline on team shipments. 

“The Hours of Service changes could not have come at a worse time,” said Dave Geyer, senior vice president/general manager of Schneider’s Van Truckload division. “We now need more drivers to do the same amount of work, but regulations, economic conditions and demographics are working against us in terms of recruiting new drivers. Those who do answer the call deserve an attractive wage and good benefits, but we’re being restricted in the number of miles we can give them and the ongoing challenges that come with sharply rising operating costs.”

“Operating safely continues to be core to how we do business,” added Geyer. “Safety performance dramatically improved under the previous hours of service rules and there is no evidence to support that changing the rules has improved safety. Ongoing feedback from our drivers is consistent: they do not feel better rested as a result of the rules change; just less productive.”

John Larkin, managing director of Stifel Transportation & Logistics Research Group, stated regulations such as HOS create a challenging driver market. “Virtually all of the proposed federal rules and regulations either reduce the size of the driver pool or reduce the productivity of the drivers remaining in the pool,” he noted. 

Many shippers are indicating carriers across the industry — as well as their own private fleets — are already experiencing productivity and on-time service declines. 

“To put it in the simplest of terms, capacity continues to tighten, productivity has been reduced and it’s harder, and more costly, than ever to acquire and retain drivers,” Geyer explained. “This trifecta is a cost burden that carriers cannot bear alone.”

So, what will 2014 bring? Get out your crystal ball.  

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