Aging U.S. Truck Fleet Due for an Overhaul

Commercial truck production may climb as much as 56 percent as owners refresh the oldest fleet in at least 31 years.

North American commercial truck production may climb as much as 56 percent in 2011 as owners refresh the oldest fleet in at least 31 years.

Output of Class 8 trucks, the workhorses of interstate hauling, may reach as many as 235,000 units in the United States, Canada and Mexico next year from an estimated 151,000 in 2010, said Kenny Vieth, partner at market forecaster ACT Research Co.

Rising freight rates and volumes are helping rekindle demand after the worst recession since the Great Depression. A 2006 production surge to a record 376,448 units before new emissions rules took effect helped create a glut heading into the economic slump, leaving some trucks parked for two years.

"My members are saying they desperately need to replace trucks," Bob Costello, chief economist for the American Trucking Associations, said in an interview.

U.S. trucks now average 6.7 years of age, about 11 months older than the historical average and the oldest in ACT data going back to 1979, according to the Columbus, Ind., company. While that fleet has logged fewer miles than usual because of the drop in shipping, "no matter how we slice it, we still come up with an answer that it's old," Vieth said.

Truck output matching ACT's forecast or Robert W. Baird & Co.'s projection of 230,000 units would add to evidence of a recovery in shipments and vehicle purchases. Typical replacement demand is about 220,000 trucks, said Kristine Kubacki, an Avondale Partners analyst in St. Louis.

"The replacement cycle is kicking in," David Leiker, a Milwaukee analyst for Baird, said in an interview.

Daimler, the maker of Freightliner trucks, expects the "vast majority" of 2011 purchases to be replacement vehicles, said Mark Lampert, senior vice president of sales and marketing for the company's North American truck unit.

That's the case at San Mateo, Calif.-based Con-way Inc., the second-biggest publicly traded U.S. trucker after YRC Worldwide Inc.

"We intend to continue acquiring tractors for fleet replacement, not expansion, in 2011," said Gary Frantz, a spokesman. The total will be "equal to or slightly more" than in 2010, when Con-way bought about 1,300 tractors for the unit that puts shipments from more than one customer on each trailer. That business has about 9,000 tractors now, Frantz said.

The 18-month recession that ended in June 2009 ravaged the shipping industry, helping drag YRC to a third straight annual loss and sending the ATA's freight-tonnage index to a seven-year low in April 2009. Sales plummeted 48 percent.

Volumes are rising again this year, with truck tonnage up for a 10th straight month in September on a year-over-year basis, according to data from Arlington, Va.-based ATA. Class 8 truck rentals climbed 27 percent through October, according to Penske Truck Rental, a venture owned by Penske Corp., General Electric and Penske Automotive Group Inc.

"We think both 2011 and 2012 will be years of significant growth," Eaton Chief Executive Officer Sandy Cutler said in an interview. "Used truck prices are up, the inventory of used trucks are down, freight is up, and the trucking companies have been announcing price increases."