Editorial: Representative of the Industry

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It’s one thing for the court to deny an extension of the Oct. 1 deadline for producing cleaner diesel engines. But it is disturbing to see the judge who has been monitoring the consent agreement between engine makers and the Environmental Protection Agency repeat an unfortunate EPA statement, that the warning of a decline in demand for new trucks, because of the new engines, “is based solely on statements of a few large fleet operators who are not representative of the industry as a whole . . . .”

Let’s run some numbers.

Ten of the largest freight-hauling motor carriers account for 110,000 trucks on the road. Renewing the fleet every three years was the industry standard at this level, at least until recently. Following that standard, these companies would have purchased almost 37,000 of the 140,000 Class 8 trucks sold in 2001.

With that kind of purchasing power, how can large companies be dismissed as “not representative of the industry?” Among these are the truckers whose complaints about the Oct. 1 engines — which they view as a step backward in terms of efficiency and cost — are getting the most attention. These are also the truckers whom we would expect to be most able to dig a little deeper into their pockets.

What of the smaller guy?

In our feature story this week, about a bonus depreciation schedule available to new equipment buyers, two medium-size fleets told us — as many others have said — that they were deferring new equipment acquisitions. These are companies with hundreds, not thousands, of over-the-road tractors, and they are holding on to them longer. And that goes for the top-echelon companies as well.

Speaking at a recent investors conference in New York, William F. Riley III, senior executive vice president at Swift Transportation Co., said the nation’s second-largest truckload carrier had been happy to trade in its tractors on a three-year cycle because engines were getting steadily more fuel efficient through about 1999. More efficient engines made for higher earnings for Swift shareholders.

Now, as new engines are expected to reverse that trend, the Phoenix-based company is moving toward a five-year trade cycle for its almost 16,000 tractors, even if it means enduring greater maintenance expense.

Even though the 30% bonus in writing off trucks would help offset higher costs of buying and operating Oct. 1 engines, one analyst said, no one seems to want to lead the charge. Moreover, the additional depreciation probably is not attractive enough to sway those who can least afford new engines, namely the smaller-size carriers.

These industry participants, we submit, do represent trucking.

This editorial appeared in the Sept. 16 print edition of Transport Topics. Subscribe today.

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