ACT Research Says Truck Capacity Expected to Decline

Despite recent truck order surges, ACT Research is predicting that there will still be shortages. Manufacturing just can’t keep up with the demand as the economy recovers from its deep recession.



Freight demand is on the rise and heavy-duty Class 8 commercial vehicles rose to 29,200 units in North American Markets this March. This put truck orders at its highest rate since May of 2006. However, even though truck demand is rising, it doesn’t necessarily mean that capacity is rising as well. Many of these trucks, according to ACT Research, are simply replacements or delayed orders from the slump last year. Many trucking companies were in bankruptcy, making them wary or unable to order new trucks when they needed them.



Bankruptcies have affected the trucking industry, as well as the air, rail, and ocean freight industries. Trucking bankruptcies have been falling, however, declining 18.5 percent in the third quarter of last year, as compared to the same quarter of the year before. This was equivalent to 330 closings, taking an estimated 10,685 trucks off the roads, according to research done by Avondale Partners. They also report that the number of bankruptcies declined over the first nine months of 2010, but each quarter, failures cut deeper into capacity. Avondale estimated that the trucking company bankruptcies in the first three quarters of 2010 were responsible for keeping 55,405 trucks out of service.



Steve Tam, Vice President of the Commercial Vehicle Sector at ACT Research says that "We are starting to accumulate a shortage of freight-hauling capacity." He said that truck capacity reached equilibrium in 2010 after the second quarter surge in inventory restocking and has tightened capacities since then. He explains that the trucking capacity shortfall is "fairly benign at this point" pulling around 10,000 trucks out of service. However, "we expect it to continue to grow" to 75,000 trucks at the end of the first quarter of 2012. Tam expects the shortfall to reach around 180,000 trucks by the end of 2012.



ACT Research reports that truck manufacturing is producing at a rate of 300,000 units per year. But truck makers are also struggling with their own capacity issues, according to Steve Tam. He points out that truck parts manufactures are struggling and that ACT Research believes that "the (trucking) industry is constrained by (tight) manufacturing capacity."



The shortages in freight hauling capacities by the trucking industry could mean that ocean shipping companies hauling ocean freight, as well as railway and air freight companies, will have to make adjustments to meet the shipping needs of the demanding market.