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NewsTalk

Welcome to the archives for NewsTalk, an IBJ blog published from November 2007 through December 2010.

Recession / Economic Recovery / Trucking / Transportation, Distribution & Logistics / Distribution & Logistics

Analyst: No trucking U-turn till late 2010

November 18, 2009

Few industries were hurt worse by the recession than freight hauling. If people and businesses don’t buy things, trucks and trains don’t haul them. And they haven’t been hauling much lately.

Indiana sustained its share of carnage from the transportation downturn. Columbus, Ind.-based Cummins Inc., which manufactures truck engines, laid off swaths of workers. So did Great Dane, which makes semi trailers in the western Indiana community of Brazil. Another trailer manufacturer, Lafayette-based Wabash National, unloaded nearly half its employees as it ratcheted back production. Accuride, an Evansville company that manufactures wheels, went bankrupt.

By now, a train light in the tunnel would be a welcome sight. At least something would be moving.

However, one of the nation’s better-known freight-forecasting firms projects little improvement until well into next year, perhaps 2011. FTR Associates transportation analyst Jon Starks notes that the trucking industry is glutted with excess equipment.

“It’s still in a very distressed level,” says Starks, whose firm is nestled in the Brown County hills. “It’s going to be a slow climb out.”

Trucking firms snapped up tractors in 2006 prior to federal mandates for cleaner-burning engines, which were more expensive. Now, FTR estimates heavy truck production at only a third of peak levels. And the trucks aren’t on the road a lot, so their lifespan is lengthening—not a recipe for ramping up assembly lines.

Trucking firms also bought lots of trailers to keep up with the booming economy and then slammed on the brakes. Most of the new trailers were built better than models they replaced, so they will last a long time, too.

As a result, Starks says, there simply is little demand for new trucks and trailers. Freight-hauling will slowly pick up in the middle of next year, but manufacturers won’t see orders rise until late in the year at the earliest.

What do think about his assessment?

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