It’s “not too bad”
Guest writer Holly McComas
Read Part One here.
I sat in on the economic track of programming at the Truck Blue Book Conference a couple of weeks ago. I personally got to hear five very engaging, informative presentations. Today I want to talk about the opening general session, and the two speakers from Daimler. They covered the past, present, and theoretical future in two very concise presentations.
Rich Simons, President of Daimler Trucks Remarketing Corp., started off the day with his pick-me-up message, “It’s not too bad!” which was perhaps not as upbeat as he meant it to be. Of course his point was entirely valid—2009 was one of the worst years ever, but things are tentatively improving: the U.S. economy showed 5.6% growth in the last quarter of 2009, and more moderate, but steady growth in early 2010.
According to Simons, freight transport is projected to grow 5% in 2010, and 4% in 2011. Fleet owners who have been waiting out the lean times will need to replace their aging trucks soon, and they are likely to buy used when they do. In a way, things can only go up from here, and those dealers, manufacturers, and operators who survived the worst of the downturn are now in a good position to prosper.
Simon’s presentation transitioned seamlessly into David Hames’. Daimler’s General Manager of Marketing and Strategy took the podium to talk about what the future holds for the new truck market. Since the recovery of used truck prices is a precursor to the demand for new trucks (a sort of trickle-down effect, I guess), this was a sensible followup. I got a good overview of the industry from this presentation.
Hames talked about trends to watch in 2010. He particularly focused on some perceptions—rumors, if you will—about how the trucking industry is “changing.” For instance: Is the owner-operator market really dead? And is the industry really trending toward smaller engines, shorter hauls? And what’s the future of alternative fuels?
The answers are No, Too soon to tell, and Who knows? According to Hames, owner-operators are the same percentage of the market they have been for the past 10 years, however their demographic is changing slightly. More minorities and family networks are operating in the market.
The question of short vs long hauls, large vs medium bore engines, and diesel vs alternative fuels are really sort of a big complicated thought-problem that hinges on rising fuel prices. When I had lunch with Terry Williams the day before the conference, we talked about the long/short haul trends and I asked whether he thought railroads might start to pick up some of the long-haul freight. He said that was a question on a lot of people’s minds, and he had tried to get a guest speaker from one of the local railroads (we have a lot of them in Kansas City) but the guest backed out at the last minute.
According to Hames, he hasn’t seen much of a trend from long- to short-haul…yet. What he has seen, and both Terry and guest speaker Bryan Haupt echoed this observation, is a trending away from the long-and-tall model of truck body toward the aerodynamic model. The aerodynamics get better fuel mileage. However, there is no significant rush toward buying smaller trucks. The bigger engines (14L+) haul bigger loads, last longer, and command higher resale prices.
That trend will probably hold steady for a bit longer, because recent advances in selective catalytic reduction (SRC) technology have almost eliminated the loss of fuel efficiency caused by in-cylinder emissions reduction methods. Hames specifically mentioned Detroit Diesel’s BlueTec Emissions Technology, as having increased fuel economy to pre-EGR levels.
That bit of intel alone seemed to sum up the mood of the speakers and their audiences in the economic track. They don’t know what’s going to happen next, and they’re grasping at any fragment of good news that might help them hang on a little longer. It occurred to me that trucking is a supportive, one might even say dependent, industry. The freight business caters to manufacturers and retailers, and when production goes down, as it has the last few years, truckers and dealers have no other avenues to fall back on.
When you add on top of that, the squeeze of rising fuel prices and tighter environmental regulations, it’s no wonder that fleet owners, and the dealers that supply them, are just hanging on for dear life. I guess from that perspective, even the minor uptick in production and freight movement seems “Not Too Bad!”
In my next post, I want to talk about Bryan Haupt’s presentation on the used truck dealer’s viewpoint, and Keith Prather, who elaborated on the trends described by our opening speakers.