Track and Quotes

Show Shipment Information - Track and Trace PackageTrack and Trace
Get a Shipping Rate QuoteRate Quote

Analyst Sees Truck 'Underbuy' Tightening Capacity
Tuesday, 05 January 2010 00:00
R.W. Baird's Langenfeld says shrinking fleet, stronger economy will raise rates in 2010

A "systematic underbuy" of heavy trucks is tightening truckload capacity and eventually will push rates higher, R.W. Baird & Co. analyst Jon A. Langenfeld said.

"Ongoing capacity rationalization" is slowly but surely improving "supply/demand balance," driving excess tractors and trailers out of the vehicle pool, and setting the stage for "significant" rate increases by truckload carriers, he said in a report to investors.

"As a sustained stronger economy emerges, we expect this underbuy of trucks to result in significant industry pricing," Langenfeld said.

Truckers battered by a three-year freight slump that began before the recession and financial crisis just aren't buying new trucks to replace older vehicles.

Federal emissions regulations that will increase the cost of 2010 trucks briefly encouraged sales of lowerpriced 2009 models, but that "pre-buying" came to an end as new truck orders dropped 50 percent from October to November, ACT Research said.

Year-over-year, heavy truck sales were down 7 percent at 10,550 units in November.

"Industry pricing will be helped by the fact that fleet additions among large carriers will be minimal,” Langenfeld said.

Also, lack of access to capital will prevent many smaller carriers from adding new trucks, he said.

The Journal of Commerce Online, 1/5/2010