The year 2006 has been a very busy year for both industry suppliers and their customers.
Suppliers have been running as fast as they can to meet the demand for product while dealing with raw material shortages and increased prices. All of the order boards for the truck manufacturers have been loaded to maximum level for many months.
The primary driver of this surge of truck orders has been the race to beat the 2007 emission requirements for engines purchased after January 1, 2007. In addition, freight volumes have been strong and most fleets have been looking for drivers to handle the business.
Many fleets have pre-purchased trucks and tractors to avoid the additional costs attributed to the new engines. Not only were there concerns about additional costs, but also there have been fears of lower fuel mileage and availability of ultra lower sulfur diesel, which is needed to run the new engines.
All those issues added up to an unprecedented increase in orders for 2006 models. As we move into the new year, we will soon discover if the fear of lower fuel mileage and fuel availability are as dire as some have predicted.
The pre-buy is certainly a double-edged sword. On one side it has pushed the level of new truck sales to very high levels, and on the other side it is predicted to be the cause of a 30 to 40 percent drop in new truck sales. Those are large percentages, but how do they affect your operation?
It is probably safe to say, that if you build trucks or supply components, it will be somewhat dark for the first few months of 2007 a flat growth perhaps, but probably not not a downturn. For fleet equipment managers, the concern will be more about keeping up with the demand for equipment, which will be driven by customer expectations.
Orders for new trailers have always been an indicator of what is going to happen in the truck market. For the past three to four years, build rates have been very good. Due to increased freight and the demand for replacement trailers, the 2006 numbers are excellent.
Based on a few conversations with trailer suppliers and economists tracking the trailer market, 2007 should still be a good year. “Flat” or “down slightly” are the terms used in describing 2007. However, “down slightly” is from a tremendous year for the market.
So, what’s the point? At the fleet level, let’s not run around thinking the sky is falling due to a big drop in truck and tractor orders. From all indications, 2007 should still be a busy year and you will still have to keep the equipment on the road.
As a matter of fact, it might be a little easier with all the new trucks and tractors that are showing up on your doorstep.
Bob Dorn,
Publisher