Truck capacity to rise 1 to 1.5 percent in 2014: ACT Research

Available truck capacity will increase this year for the first time since 2007, though not by much, ACT Research predicts, as a stronger economy and higher freight rates help trucking companies replace more older trucks and expand their fleets — at the margins.

“Our forecast for this year has active truck capacity rising by 1 to 1.5 percent,” said Kenny Vieth, president and senior analyst at ACT. After several years of decline during the recession and recovery, “we’re beginning to see the beginning of capacity addition,” he said.

ACT projects retail sales of 222,000 heavy trucks in 2014, with about 190,000 new tractors directly replacing older equipment. The additional 32,000 tractors will expand the number of active Class 8 trucks hauling freight, a population ACT puts at 2 million tractors.

New truck orders have been rolling strong and steady since October, with 547,200 orders for Class 5-8 medium- and heavy-duty trucks placed since that month. The aggregate value of used trucks hit its highest level on record in May, and trailer sales are booming, Vieth said.

“There’s a little bit of stickiness in pricing, the U.S. truck fleet is old, and new trucks get good fuel economy,” he said. “You add all that together and truckers are at the point where they finally feel they can get a better rate, things are sustainable and they can invest in their business.”

At 25,900 units, preliminary numbers for new Class 8 orders in May increased 14 percent year-over-year at rose 4 percent from April, the strongest month for Class 8 orders since 2006.

“At the end of September, the order backlog was about 76,000 units, and the backlog-to-build ratio was 3.5 months,” said Vieth. “By the end of February, that ratio was over five months, and we now expect the order backlog at the end of May was about 120,000 units.”

Even with the slight increase in active truck capacity, overall capacity is expected to remain relatively tight as the economy expands at a more consistent and faster pace. That will keep upward pressure on contract truck rates, probably for the next two years, Vieth said.

Although truck manufacturers can build more Class 8 tractors, there’s no assembly line producing qualified truckers. The lack of drivers is now the biggest cap on capacity. The number of heavy-truck drivers increased only 1.9 percent in 2013, according to federal data.