Motor carriers are scrambling to buy heavy-duty trucks as a vigorous economy creates huge demands to haul goods.
Sales of big rigs more than doubled in May, rising to 35,600, or up 110 percent over the same month a year earlier, according to ACT Research.
It was one of the strongest May sales levels in decades, said Don Ake, vice president of commercial vehicles for FTR Transportation Intelligence.
Motor carriers are adding to their fleets in an effort to keep up with the volume of cargo that needs shipping.
The quantity of freight hauled by the trucking industry surged 9.5 percent in April compared with the same month a year earlier, according to the American Trucking Associations. This is the largest year-over-year increase since October 2017.
That’s contributed to the shortage of trucks. There were 8.4 trailer loads for every available truck in early June, according to DAT Solutions, which tracks rates and loads.
Old Dominion Freight Line said its freight shipments per day are up 11 percent this May over last year.
Dealers such as Rush Truck Center in Abilene, Texas, are logging brisk business.
“Sales of new trucks so far have more than doubled from last year,” said Matthew Fausey, a salesman at the dealership.
Fleets are snapping up the trucks at the dealership, mainly for use in the West Texas oil fields.
Fausey said he expects strong sales to continue into next year.
CFI, a Joplin, Mo., motor carrier, just increased its 2018 order for new Kenworth T680 trucks by 100 vehicles to 600.
“With the increase in freight demand, it affords us the opportunity to invest more capital back into our company and buy more trucks,” Randy Cornell, vice president of CFI, told Trucks.com.
The subsidiary of Canadian-based TFI international has about 1,900 trucks in its fleet and typically replaces 450 annually.
“Freight rates are great and carriers are investing in their businesses by buying more trucks,” said Kenny Vieth, president and senior analyst for ACT Research.
The average spot van rate was $2.16 per mile in May, up 47 cents from the same month a year earlier, according to DAT.
Truck manufacturers are reaping the profits of strong vehicle sales.
Navistar International Corp. posted a second-quarter profit of $55 million compared with a net loss of $80 million during the same period in 2017. Revenue jumped 16 percent to $2.4 billion, led by a 22 percent increase in truck sales.
“The second half of 2018 looks promising, with a strong industry, new product deliveries and improving results,” said Troy Clarke, Navistar’s chief executive, in a call with investors Tuesday.
Paccar Inc., owner of the Peterbilt and Kenworth truck brands, reported its best-ever first-quarter revenue and profit in April.
Earnings surged 65 percent to $512 million in the first three months of the year compared with the same period in 2017. The truck manufacturer reported net sales of $5.7 billion, an increase of 33 percent from a year earlier.
“Paccar benefited from record quarterly truck deliveries driven by strong market share and robust global truck demand,” said Chief Executive Ron Armstrong.
The sales pace has left some truck makers struggling to keep up with production, Vieth said.
The industry’s order backlog reached 208,000 trucks in April, up from 94,400 in September, Vieth said.
The wait time for a new truck order now averages eight months, he said.
Buyers of Freightliners, Daimler’s flagship brand, will have to be patient. “You are seeing the backlogs grow to the point where you can say we are sold out for 2018,” said Roger Nielsen, chief executive of Daimler Trucks North America.
The heavy demand for new trucks is putting pressure on the industry’s supply chain.
“Some truck makers are having supply chain challenges in getting certain parts manufactured,” Vieth said.
This voracious growth will not last forever. Economic conditions should remain strong for the remainder of 2018 and throughout the first half of 2019 before tapering off, Vieth said.
“Rarely do you see peaks of economic cycles last more than two years,” he said.
“The economy is growing at around 3 percent this year,” Vieth said, “but it’s going to be harder to grow at that rate next year.”