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December 3, 2007 8:00 AM, EST

Class 8 Fleet Size Grows 3.2%

Move Comes as Small Firms Retain Tractors
By Frederick Kiel, Staff Reporter
This story appears in the Dec. 3 print edition of Transport Topics.

The number of U.S. heavy-duty trucks on the nation’s roads climbed to 3.59 million in the third quarter, a 3.2% increase over last year and a slight increase over the second quarter gain of 2.2%, R.L. Polk reported.
Polk said that while new truck registrations fell, small fleet registrations of new trucks dropped less than those of large fleets and small fleet purchases propelled a 56% jump in used-truck registrations.
Changes in fleet size reflect registrations of new vehicles as well as retention or retirement of older vehicles.
The small gain in overall fleet size reflects declining truck tonnage more than it does a pullback from last year’s record Class 8 truck sales, which resulted from fleets’ accelerated purchases to avoid buying trucks with 2007 engines built to meet new federal emission standards.
“The big fleets have still not come back into the market and we won’t see any turnaround until their freight loads pick up,” Gary Meteer, director of R.L. Polk’s Commercial Vehicle Group, told Transport Topics. “What growth there is in new heavy-duty trucks is coming from the small guy.”
In a preliminary report Nov. 27, American Trucking Associations said October truck tonnage declined by 1.5% from the same month in 2006. Tonnage hauled has declined in 14 of the last 16 months, according the federation’s monthly survey of its members.
In the third quarter of 2007, 36,700 new Class 8 vehicles were registered in the United States, R.L. Polk’s Commercial Vehicle Market Intelligence Report said, which was issued Nov. 26. In the second quarter, Polk counted 47,384 new Class 8 registrations.
Through the first three quarters of this year, 306,000 more heavy-duty trucks were put into operation, just under half of the 607,000 units added in the same period last year. In September 2006, Polk measured 3.48 million tractors on the road.
“This trend . . . indicates a basic underlying weakness in the business,” the Polk report said. “This weakness is much greater than just a negative response to the new engines or the pull-ahead due to the mandated engines regulations imposed for the 2007 calendar year.”
“If not for small guys, the business would really be in the toilet,” Meteer said.
“Small fleets and owner-operators are the strong side of the market,” he added. “A large percentage of these are over-the-road companies, often picking up business from brokerage subsidiaries of the major companies.”
Meteer said many of the small company owners he met with “believe that business is good; they’re confident and so they want to buy new trucks, not used ones.”
“Established small firms tend to buy new trucks in good markets,” Meteer explained. “Start-ups, firms with small operating budgets or with poor credit will buy used trucks, even in good markets.”
Fleets of five or fewer trucks registered 30,944 new Class 8s through the first three quarters of 2007, a 14.1% decline from 36,042 last year, while fleets of 500 or more registered 50,747, compared with 90,303 last year, a 43.8% drop, Meteer said.
Polk’s data also reveal that carriers have been reducing the age of their fleets.
“The data indicate that most of the new registrations during the past 12 months actually were for replacement units over 50% of the time,” the Polk report said. “With the high number of used Class 8 registrations, the data suggests that the really old and inefficient models were taken out of the population and replaced with either a first-time registered model or a previously owned one.”
Eric Starks, president of transport forecasting firm FTA Associates, said the Class 8 fleet was “still pretty young, which is not the traditional or normal pattern, but which means fleets don’t have to make major decisions on new purchases until late next year or early in 2009.”
“We estimate the Class 8 fleet to average 8.4 years right now, which we expect to peak at 8.6 years sometime during 2008,” Starks told TT. “The average age became relatively young last year because of the large pre-buy, going to as low as 8.2 years, which lasted into the first quarter of this year.”
Polk’s data show that all truck manufacturers suffered double-digit drops in new Class 8 registrations through the first three quarters of this year.
In descending order, Freightliner Trucks is down 44.5%; Mack Trucks, 42.4%; International Truck and Engine Corp., 41.1%; Volvo Trucks North America, 36.5%; Kenworth Truck Co., 29.2%; Peterbilt Motor Co., 29%; and Sterling Trucks, 28.2%.
Freightliner and Sterling are both subsidiaries of Freightliner LLC, itself part of Daimler AG. Mack and Volvo are part of Volvo AB. Kenworth and Peterbilt are part of Paccar Inc.