Trucking turning point nearing: Analysts

SOUTHFIELD, Mich. — The market for commercial vehicles is expected to pick back up next year as the economy trends up, but a return to the record-breaking sales of a few years ago is not anywhere in sight, according to the latest report from Polk & Co.

In the July issue of "Polk View: The Future of the U.S. Commercial Vehicle Market, the automotive market intelligence company predicts sales will rebound after the housing market bottoms out.

For 2009, Polk expects registrations of commercial vehicles in Classes 3-8 to drop for the third consecutive year, nearly 21 percent (from 485,000 to 380,600.

Although a further decline is possible if the economy does not show improvement in the near term, Polk expects a boost in sales as freight delivery and construction pick up. The housing market is projected to "bottom out" this month, and as that market and the economy start to pick up, vehicle sales are expected to increase as well.

By 2013, Polk predicts total commercial vehicle registrations to reach 583,900, still well below pre-2008 volumes. (In 2006, commercial vehicle registrations reached their peak volume of 802,100)

The number of total vehicles in operation has also slowed, especially in the Class 6-8 market, while the percentage of Class 3-5 trucks in operation has been increasing. By 2013, Polk predicts these smaller trucks will make up almost 45 percent of the total commercial vehicles on the road, up from 38.6 percent in 2004. This is mostly driven by the increase in Class 3 trucks. 

It’s clear that most analysts believe the
worst is over for OEMs and carriers alike.

From 2009 to 2013, heavy-duty trucks should grow at a Compounded Annual Growth Rate of 0.3 percent, while medium-duty is expected to grow 3.1 percent.

Meanwhile, a more short-term report shows that truckload carriers have a somewhat rosy outlook and expect things to improve in the coming months.

According to a recent survey conducted by Transport Capital Partners, carriers are seeing modest improvements in freight volume, spot pricing and credit, among others. 

The survey found that 37 percent of carriers expect traffic volumes to get better over the next 12 months, up from 21.4 percent when surveyed in February.

Despite the fact that freight has been weak for the last 36 months, spot pricing has risen since January. "This indicates that we have experienced some seasonal improvements in demand since the middle of 1Q09; however, it may be premature to suggest that year-over-year comparisons are improving," the company says.

When asked about rates, only 28.7 percent of respondents believe rate pressure will worsen over the next year, down from 58.3 percent in the first quarter of 2009.

Credit and insurance seemed to be areas where carriers expressed the most optimism. According to the survey, 57.4 percent of the carriers said that credit availability has been stable over the past year, while 36.9 percent indicated that their lender has been supportive and understanding during these times. Respondents also indicated that insurance renewal terms were improving, with 45.9 percent of the vote.

Also, only 13.1 percent are considering liquidation in the next six months if conditions don’t improve, down from 22.3 percent. In addition, only 18.9 percent are thinking about selling during the next 18 months. The percentage of carriers considering buying another carrier rose this time around to 37.7 percent from 35.9 percent in the first quarter.

— with files from Truckinginfo.com