As discussed in previous articles, to increase truckload capacity more trucks would need to be on the road. To have more trucks on the road meant that more trucks would need to be purchased. Well, that’s exactly what is happening.
Truck sales for January are up by over 30% from 2017. According to the ATA, the freight market is as strong as it has been since federal deregulation in the 1980’s. To surmise, trucking companies are buying more trucks to meet the demand of more shipments.
Trucking companies purchase trucks on a regular basis to keep their fleet current. Current would be fleets that are no more than three years old. They trade the older trucks in for new trucks while there is still life in the older trucks to get a better deal. In addition, by keeping their fleets current they experience less repair costs and have some warranty protection.
Had truck sales for January been at or slightly above last years numbers, we could assume that carriers were only replacing the older trucks in their fleets. A 30%+ increase tells us that trucking companies are expanding their fleets to meet capacity.
I don’t need to tell you that a trucking company is a business. A truck is a major purchase. The cost of a truck isn’t just the amount paid for the truck, there’s much more. For every new truck added (not replaced), the trucking company bares the cost of insuring that truck, paying taxes on that truck, and putting a driver behind the wheel.
As a business, a trucking company isn’t adding trucks on a whim. They’ve done their research and determined that the increase in freight is sustainable, not a temporary upswing in the economy. A truck is a major investment, not a gamble.
Trucking companies are now working on attracting drivers as well as retaining current drivers. You can have all the trucks you want, but without a driver it’s just decoration. To do this they are paying drivers more and trying new ways of paying drivers due to the ELD mandate.
One company is trying a driver guaranteed salary, some are offering big bonuses, others are working on ways to attract teams, while others are trying the old and proven way of paying a driver more per mile. This driver pay dilemma is going to take some time to work itself out. It will, and when the dust settles one thing is for certain, there will be more trucks on the road.
Thanks, and talk soon.