Editorial: Savor the Good Times

The money’s simply overflowing a lot of trucking suppliers’ coffers these days. Major players like Detroit Diesel, Cummins Engines, Eaton, Dana and Meritor are basking in record second-quarter sales and — in many cases — record profits as well.

“Our best quarter ever in terms of sales volume, net income and earnings per share,” declared Dana Chairman Southwood Morcott.

These companies are selling as many components for big trucks as they can pop off the production line. No surprise they’re happy campers.

But what does this tell us in trucking? It tells us that our appetite for new equipment shows no sign of abating. Because it’s trucking’s capacity to gobble up new trucks — more this year than ever before — that drives the revenue growth in the supplier market.

Analysts will tell you that this year trucking companies will buy more than 250,000 Class 8 vehicles, up 22% from last year, which was itself a record year.

That means the Freightliners, Navistars, Volvos and Macks of the world have been keeping the suppliers busy on behalf of their customers.

But is there any chance this modern Gold Rush is really an extended calm before the storm? Is the industry, impelled by the desperate need to attract drivers, buying more trucks than it will ultimately be able to seat or fill with freight, as analyst James Valentine has been predicting for some time?

Most observers say no. When the curtain falls — as it surely will — on this period of economic bliss, the cause will be macroeconomic, not industry-specific, most analysts say. A nationwide recession or a return of economic chaos to Asia or Latin America, for example, could very well spark a contraction in trucking.

While some analysts have been forecasting an imminent dip in the economy, and thus in the freight business, the U.S. economy continues to churn along, with inflation seemingly well under control. And there are new signs of life in the economies of the Asian nations that have been in recession for some time, which should pump new blood into the world’s trade stream.

For now, a good time is being had by almost all. It’s wise to savor the good times, even as we keep a steady eye on the horizon for storm clouds.