If you thought the Australian industry was booming then the US truck market is off the Richter scale.
Through the first 10 months of 2018, 440,700 new trucks have been ordered in the US for which is a massive 95 per cent increase compared with the same period a year earlier according to ACT Research.
US Fleet operators are investing record profits from this year’s burgeoning freight market in new equipment, said Kenny Vieth, ACT president and senior researcher.
“At the top of the (economic) cycle, truckers generate a lot of free cash,” Vieth said. “When they make a lot of money, they have to pay taxes on it.”
Many are looking to protect profits by replacing older trucks that use more fuel and lack crash-avoidance technology like anti-rollover systems, lane keeping, adaptive cruise control and automatic braking.
Trucking company studies have found that adaptive cruise control, for example, reduces the risk of a rear-end collision by more than 80 percent, Jon Morrison, president, Americas for WABCO Holdings Inc., said.
Safety technologies also help lure drivers in a competitive market that has 63,000 openings, according to the American Trucking Association.
In October, for the fourth consecutive month and the eighth month this year, fleets and dealers ordered more than 40,000 trucks, according to FTR Transportation Intelligence.
“October has seasonally been the third-highest order month, suggesting that peak orders are behind us,” Ann Duignan, an analyst with J.P. Morgan, said in a research report.
The heavy pace of orders had created a production backlog among manufacturers of about 300,000 units, Vieth said. That means some of those trucks won’t be delivered until late next year.
By then, freight demand may have softened, depending on the impact of trade tariffs, which currently add $US 20 billion in taxes on $US 200 billion in goods, Vieth said. Those tariffs could rise in January and add $US 30 billion more to the price of imports like steel and aluminum.
That, in turn, could drive up prices for many products and weaken U.S. economic growth, he said.
Spot rates for fright shipments have dropped for the last three weeks, according to DAT Solutions, which tracks what truckers ask and shippers pay for loads. Shippers are able to place a load on the first call 85 per cent to 90 percent of the time compared with 75 per cent in the first half of the year, Vieth said.
ACT predicts the rate of freight growth will slow to 2.5 per cent in 2019 from 5.9 per cent this year.
“The number of trucks chasing the freight is going to grow by 7 per cent in 2019” from about 3 per cent this year,” Vieth said.