Heavy Duty Truck & Trailer
Although statistically the economy has not moved to recession,
most economic measuring agencies describe the overall economy as
sluggish, slow growing, or flat. Economic numbers for the first
calendar quarter show GDP improved 1% over the previously
reported .6%. The economy grew in May for the eightieth straight
month. The Conference Board reported that all the economic
indicators (leading, coincident and lagging) were slightly
positive. Also in May, the Institute of Supply Management
reported that their Purchasing Managerís Index for manufacturing
activity increased above 50 for the first time in 4 months to
50.6. This indicates a growing manufacturing economy. On the
negative side the non-manufacturing index fell 5 points to 48.2
indicating, a significant weakening in this sector. Oil and
commodity prices continue to drain the energy from the economy.
The general outlook for the second half of 2008 is for continued
slow growth, as consumer confidence remains at the lowest level
since the early 1990s. There are many opinions as to when the
economy will turn. Some economists are projecting that the
current morass will last until mid 2009. Any upturn of
significance will be spurred by a drop in both oil and commodity
prices. There is no consensus as to when this will occur. Some
leading economists are projecting that oil will be $80-90 per
barrel by the end of the year. Others are projecting that oil
may reach $170-190 per barrel. With global oil demand falling,
Asian economies weakening, and Europe struggling as much or more
than the U.S, it appears more and more likely that oil prices as
well as commodities will begin to decline.
Trucking overall continues to decline. Truck builders according
to latest data are aggressively eating into already diminished
backlogs drawing them down 5000 units in June. Dealers continue
to report declining new truck sales mirroring 2007 volumes.
Public trucking fleet stocks rallied in June but it appears to
be a false rally as many majors such as UPS, FedEx and YRC
expect to publish declining profits for the second quarter.
Major fleets are continuing to report that they can not totally
recover their costs in all segments except flat bed carriers.
There is still excess capacity in most segments. Even with
bankruptcies up over 143% over last year, there is still
significant conjecture that three to four LTL carriers and
several full truck load carriers could fail by year end. Year to
date, Fleets owning over 42000 trucks have failed. This has
definitely damaged the used truck market. General opinion is
that we should not expect an improvement in business conditions
for over the road trucking until 2009. This improvement will be
driven by overall reduced truck fleet capacity.
Overall the economy in the U.S. and Canada is stronger that
expected and definitely stronger than reported in the news
media. It appears that unless something catastrophic happens, it
will continue to show slow growth throughout the second half of
the year. A rebound for trucking will occur once fuel prices
decline and excess capacity is eliminated.
If you would like to read the
rest of this article contact email@example.com.
This summary is offered
for information only. It is compiled from several governmental
and industry resources. The origin of the information is given
where possible. Any actions taken as a result of this summary is
the sole responsibility of the readers. Business Perspectives
takes no liability for the use of the information above its
informational use. The opinions expressed are the sole property
of Business Perspectives LLC and should not be redistributed or