Fleet Management

Analysis: Could History Repeat Itself With Truck Capacity?

A boom in freight demand in 2014 led to an excess of capacity the following year. Could we see this trend repeat itself in 2018? Analysis by Business Contributing Editor Evan Lockridge.

March 2018, TruckingInfo.com - Feature

by Evan Lockridge, Business Contributing Editor - Also by this author

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If you’ve ever taken a close look at any prospectus for an investment, you’ve seen the phrase cautioning, “past performance is no guarantee of future results.” That’s not bad advice any time you spend a large sum of money. And it’s also wise to remember the old phrase, “Those who cannot remember the past are condemned to repeat it.”

Will increasing freight demand and truck sales lead to an excess of truck capacity in the near future? Source: DAT
Will increasing freight demand and truck sales lead to an excess of truck capacity in the near future? Source: DAT

The recent booming truck sales bring to mind a past we’d just as soon not repeat. When you look back just four years ago to 2014, a lot of heavy-trucks were sold. At the time, it was the best year since a record finish in 2006. Freight demand in 2014 had suddenly increased, and everyone was trying to move more cargo, as indicated in the amount of shipments as well as freight spending.

But when 2015 rolled around, things weren’t as rosy.

There was excess truck capacity in the marketplace, not just because there was less cargo to move, but also because fleets had more trucks. The result? Trucks not moving to their full potential, or even sitting on the fence, while freight rates dropped.

What’s interesting is that when you look at how the economy was performing during that time, it was always expanding, but at times the rate of expansion was less strong than at other times. When the gross domestic product was in a higher gear, which meant more goods were being shipped by truck, the freight markets either led the way or followed. When the GDP was lower, trucking followed the same pattern.

As 2017 moved forward, things once again improved in terms in the amount of freight, rates and the overall economy. Truck sales started booming again, and the economy turned in its first back-to-back quarters of better than 3% annualized growth in years, with the final quarter of last year not far behind.

Recent numbers show heavy truck orders in January soared, with one account showing orders hit their highest level since 2006. Some believe truck sales in 2018 may be end up the best on record after a stunning 2017.

Couple all of this with an economy that’s expected to keep growing around its current rate of 2.5%-3% annually, a good supply of freight and rates remaining healthy thanks to tight capacity, and it’s time to get out the confetti, right? Maybe not.

Ignoring the fluctuations in the stock market in February – after all, Wall Street is not the economy – there are some concerns that could slow down the economy.

  1. Interest rates are all but guaranteed to head higher this year and next, thanks to expected moves by the Federal Reserve. That can curtail spending on many levels, from corporations to individuals.
  2. Total freight shipments in the final quarter of last year, while still expanding, increased by the smallest amount of any quarter in 2017, according to the U.S. Bank Freight Payment Index. That could be just freight following a slightly slower overall economy. Or it could also be a signal that 2018 could see an economy growing more slowly than last year.
  3. Spot freight rates slid through early February, although they’re still not far from multi-year highs hit early in the year.

The bottom line? This tight capacity can’t last forever. At press time, some analysts were saying the risks of an economic slowdown were rising. And if you’re not smart about fleet growth, that could leave you and your fleet with too many rigs, and less business, with history repeating itself.


  1. 1. Bill wade [ March 02, 2018 @ 05:03AM ]

    Good piece and a thoughtful warning...don't forget to factor in the rapid growth of 'trucks as warehouse' caused by b-to-c explosion...part of the Amazon Effect.

  2. 2. MC [ March 06, 2018 @ 07:04AM ]

    History is repeating itself...again. Government and business leaders simply refuse to learn from past mistakes and only care about short-term gains rather than long-term health of the economy. Not only will there be an economic slowdown, but there will be a crash, and it'll likely be bigger then the "Great Recession".
    We've got the credit card debt bubble, the student loan debt bubble and the medical debt bubble all ready to burst, coupled with Trump's isolationist policies (and Twitter feed) turning our backs on allies and trading partners, it'll be one big sh*t storm that this country will be lucky to survive.
    Wages haven't kept up with inflation since the 1970's. To get a better paying job, you need to strap yourself down with 10's to 100's of thousands of dollars of student loan debt. The loans take decades to pay off, you're not guaranteed one of those better jobs, nor are you guaranteed that the degree/certificate that you worked hard for is even worth the paper it's written on.
    The healthcare system in the US is criminally expensive, sending and keeping millions of Americans into poverty. Pharmaceutical companies run by venture capitalists price are gouging it's customers. Insurance companies, not doctors, are in charge of what level of care a patient gets and medical institutions can charge whatever they want without informing the patient first.
    The average American doesn't have any money...everything is bought on credit. Something's gonna give and it's not going to be pretty.


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