Fleets More Confident About Buying in Months Ahead

After expressing cautious optimism for the second quarter, fleets are starting to be more confident about buying new equipment in the next three months, according to CK Commercial Vehicle Research's third quarter Fleet Sentiment Report.

The FSR Buying Index jumped to 90.2 for the third quarter, the best reading in two years. This was a 39 percent improvement over the second quarter.

The third quarter report, which asked 51 fleets about their buying plans, said 45.1 percent expect to place orders for medium and heavy power units this quarter, while 43.1 percent will order new trailers over the same period. Fleets responding to the questionnaire operate more than 40,000 medium- and heavy-duty power units and 110,000 trailers.

"The number of fleets planning equipment purchases continues to improve quarter to quarter in 2010," said Chris Kemmer of CKCVR. "In Q3 we again saw reduction in the number of parked vehicles reported, improved stated utilization rates and a closer alignment of available freight to haul and fleet capacity."

Buying Activity

The number of fleets planning to purchase power units in the next three months is now above the four-quarter moving average, the report said. Although the percentage is still below 2008 and 2009 levels, this is a good improvement. The largest fleet in the group does not plan to place orders, but 25 percent of the fleets with order plans operate more than 1,000 units.

"Our increased percent of fleets planning orders in the next three months indicates that actual order activity should continue to improve," the report said.

While more fleets are planning orders, the size of the orders is down somewhat, especially for trailers.

"The one measure which moderates our enthusiasm now is the average size of the planned orders, which fell below the four-quarter moving average for both power units and trailers in Q3," Kemmer said.

The report found that 36 percent plan to add dry vans, while 32 percent plan to order reefers. Three fleets expect to buy flatbed trailers, and two plan to buy tankers.

Adding Capacity

Thirty percent of respondents will place orders to add capacity in the next three months, versus only one fleet last quarter. One less-than-truckload fleet said all of their planned order activity was for added capacity.

However, 70 percent of those placing orders are not adding capacity, which affects the average percent of all orders that represent added capacity at 10 percent.

"If trucks have been parked against the fence, they can be used now to haul additional
freight long before new units need to be purchased," the report said.

For those planning trailer orders, 36.4 percent are doing so for added capacity, slightly higher than for power units. "Adding capacity right now might be easier and cheaper with more trailers than with more power units - and they don't have engines to decide about."

The survey also found that utilization rates are up for both power units and trailers, a sign that the overall fleet environment and freight demand are improving.

"Fewer fleets are reporting that freight demand is less than their capacity with a increase of fleets indicating they now need more equipment to meet that demand."

CKCVR, a business of CK Marketing & Communications in Columbus, Ohio, regularly polls their group of fleet advisors about equipment purchasing, operating and maintenance practices.