A Newport Communications
Service since 1970
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| February 2001 A Newport Communications Service since 1970 |
Class 6-8 retail truck sales rose 10% in Dec. to 24,937, about half the usual seasonal gain over November, says Newport economist Jim Haughey. Tighter capital budgets no doubt restrained the usual year-end buying surge. Sales have been stuck at a seasonally adjusted 26,000/month for 4 months, about same as late '97/early '98 when economic growth, like today, was about average & there were recession worries. Haughey expects the truck sales recovery to start slowly this spring. 2001 forecast: 350,000 — same as '98.
Trailer shipments fell sharply in Nov. to 15,416 & prices slipped 0.6% in Dec., but Haughey says further declines aren't likely & market should rebound enough later this year to boost 2001 total to 240,000 units, about same as 2000.
We're seeing "less growth," but "not a true downturn" in many trucking sectors, which means steady demand for Class 8 freight hauling, says Economic Planning Associates. But slowing economy, influx of new equipment in '98/'99, glut of used trucks & fuel/wage squeeze on carrier profits likely means lower heavy truck sales well into 2001. EPA's forecast: 173,000 U.S. Class 8 retail in 2001, down 18% from 2000. They expect demand to pick up in 4th quarter, paving way for 12.5% increase in 2002.
Positive economic factors, like expansion of e-commerce & strength in construction markets, will keep Class 7 sales from plummeting, EPA says. Forecast: 113,500 U.S. retail in 2001, down 9.2% from 2000, then up 6.6% in 2002.
After two strong years, Class 3-6 market shows signs of fatigue. 2001 sales forecast at 225,500 units, down 7.2% from 2000, then up 7% in 2002. Contact: EPA (631) 864-4900.
FREIGHT TRENDSHDT's freight volume index rose at 3.3% annual pace in the last 3 months, smallest gain in several years, says Newport's Haughey. Wary consumers kept 2000 Christmas sales gains to about 2% over '99 after several years of 5% increases. A plunge in auto sales also slowed freight demand. He forecasts freight volume growth at 2% in 1st half of 2001 as excess inventories are absorbed & production falls below consumption. Freight growth should return to 4% pace in 2nd half, consistent with 3% or more overall economic growth.
LTL & truckload rates slipped slightly in Dec. as fuel price adjustments worked in reverse, says Haughey. But LTL rates are up 4% in last 3 months & TL rates rose 1%. He predicts weaker economy & falling diesel prices will hold LTL rate hikes to 1.5% this year. TL rates likely to rise 4% as carriers catch up to fuel prices & charge more premiums for faster, time-certain service.
Load availability took customary Dec. dip after struggling through most of 2nd half, according to DAT Services. "This was a big change from '99 when the strong economy pumped load availabilities to very high levels," says Market Research Analyst Michael Grant. "This year the slowing economy tightened load-posting levels from June through Dec." Contact: michael.grant@dat.com or (800) 526-5417.
EQUIPMENT UTILIZATIONMacKay & Co. estimates 51,400 Class 8 trucks — 2.5% of nation's fleet — were taken out of service 2nd half of 2000. Owner-operator capacity dropped 16.1%, lease/rental fleet was cut 3%, for-hire 2%, private fleets 1%. Construction, mining, refuse, ag, were unchanged. 4th quarter fleet survey puts Class 8 utilization at 86.5% but adjustment for fleet downsizing drops it to 84.5% — about same as 4th quarter '99, says MacKay. Drop in private, for-hire, lease/rental & owner/operator utilization was offset by gains in ag, construction/mining/refuse, govt. & utilities.
Class 7 utilization was 85.1% vs. 85% year ago; Class 6, 81% vs. 76.3%; trailers, 85.1% vs. 86.6%. Lower fleet capacity & utilization drops MacKay's estimated market for Class 6-8 & trailer replacement parts to $11.34 million ('99 dollars) in 2000, 0.5% below '99 sales.
ENERGYOPEC is determined to keep crude oil in high $20s/barrel, says Haughey. "We have to assume they can successfully do this at least for more than a year, until some members begin to cheat." That will keep diesel prices this year in $1.40/$1.50 range vs. $1.30 or less estimated several months ago by U.S. Energy Dept. Other worries: Natural gas prices are soaring & will likely do so through a cold winter, which also adds to heating oil demand. "We remain vulnerable to diesel shortages & price surges because of extremely low inventories of refined products," he warns.
ArvinMeritor posts $1.7 billion sales for fiscal 1st quarter ending Dec. 31, down 14% from same period last year. Income before special items was $20 million, down 69%. Company took $46 million in special charges related to restructuring announced earlier. Commercial Vehicle Systems sales were $552 million, down 26% from last year. Decline in N. American Class 8 truck production put pressure on operating margins, but company says they should improve in 2nd quarter with restructuring & other cost-cutting measures.
Caterpillar says higher truck engine market share & robust electric power generation market helped soften impact of reduced N. American truck demand. Company's 2000 worldwide engine sales were $7.06 billion vs. $6.85 billion in '99. N. American engine sales were $3.88 billion vs.$3.69 billion. 4th quarter worldwide engine sales were $1.98 billion vs. $2.18 billion 4th quarter '99. N. American engine sales fell to $1.02 billion vs. $1.08 billion 4th quarter '99.
Cat expects its sales to be flat this year, with strong petroleum & electric power generation markets offsetting lower truck engine sales. Company forecasts moderate world economic growth due to slowdowns in major industrial countries. U.S. GDP growth is forecast at 2.5% this year, half the growth rate of 2000, with lower interest rates expected to spur 3rd or 4th quarter rebound.
Volvo Truck Corp. delivered 81,826 trucks worldwide in 2000, down 4%. Sales in N. America were 23,608, down 31%. All other major markets showed gains: W. Europe, 42,143, up 9%; E. Europe, 4,089, up 41%; S. America, 4,534, up 16%; Asia, 5,554, up 104%.
ALLIANCES & ACQUISITIONSAB Volvo forms Volvo Global Truck Co. following acquisition of Renault V.I./Mack. U.S. Justice Dept. OK'd the deal after Volvo agreed to divest its N. American low cab forward business. Mack & Volvo's heavy duty low COE combined share of U.S. market is 86%, which government calls "near monopoly." Volvo Global Trucks will oversee Volvo, Renault & Mack operations. Tryggve Sthen, former Volvo Truck president, is CEO.
Renault plant in France may build cabs for new midsized trucks being developed by Volvo & Mitsubishi. Scheduled to debut 2004, they will be sold under Volvo name in Europe & Mitsubishi in Japan. Companies still working out details. Meantime DaimlerChrysler, which owns 34% of Mitsubishi, reportedly finalizing deal with Hyundai to build trucks in S. Korea.
Penske's purchase of Rollins Truck Leasing didn't jolt competitors. Lease/rental consolidation is inevitable, says one, as companies reach for larger service areas & economies of scale. $754 million deal adds 53,000 vehicles to Penske's 152,000 truck fleet, bringing it neck-to-neck with Ryder in terms of fleet size. Rollins, the country's 3rd largest leasing company, has 270 locations in U.S. & Canada. Penske, joint venture of Penske Corp. & GE Capital, has 750 in N. America, Latin America & Europe. Rollins' stock ranged from $5-$13/share last year. Penske will pay $13.
Hendrickson Int'l & Delphi Automotive to jointly develop & manufacture composite bumper for medium/heavy trucks & buses. Dorian Drake Int'l to market & distribute Grote safety & lighting products worldwide, except N. America.
Tosco Corp's 76 Lubricants Co. buys Sunoco's Kendall motor oil brand & related assets. Canam Manac Group buys Trois-Rivieres Trailers (formerly Kalyn/Seibert Canada/Fabrex) from RailAmerica. Wabash National buys Breadner Group, Canadian trailer distributor.
Texaco named preferred supplier of fill & aftermarket lubricants to AB Volvo, allowing Texaco to bid for Volvo business country-by-country. Texaco & Volvo will work together on lubrication research, & Texaco products will be Volvo-branded in some markets.
Westport Innovations to design high-efficiency, low-emissions natural gas fuel system for Isuzu engines. Company also working on natural gas fuel systems with Cummins, Ford & Germany's MAN.
TECHNOLOGYMega dealers Stoops Freightliner & Rush Enterprises (Peterbilt) to provide discounts & rebates on purchases made through TruckersB2B. Corcentric to provide e-commerce technology for aftermarket buying group AIM-CMB Marketing.
International Paper's Xpedx distribution div. to install XATA onboard computers in 1,200 trucks. XATA expands market reach from logistics & private fleets to LTL & for-hire truckload carriers with automated driver logs & other wireless trucking systems.
Web-based truck, trailer auction Hookup.com gets 2,280 bids in Nov., up from 150 in Aug. Terion buys Dolphin Software Services from Orbcomm. HdeXchange.com launches electronic product info & pricing exchange for truck parts manufacturers, distributors & dealers.
Westport Innovations delivers 1st of 3 prototype liquefied natural gas heavy trucks to Raley's Supermarkets. Project outfits Cummins ISX engine with Westport's High Pressure Direct Injection technology. Natural gas is major power source, diesel used only for ignition.
Haldex says its intelligent air dryer, currently used in a new high-tech MAN trucks, will launch soon in America. An air disc brake combining Haldex & Midland technology (Haldex bought Midland-Grau in '98) being considered by trailer makers here; so is new electronic trailer braking control.
GE Capital named exclusive financing provider to Point2 truck & equipment web marketplace. BeVocal to offer traffic reports via phone using info provided by Etak & Westwood One.
TRANSITIONDaimlerChrysler consolidates commercial vehicle component activities under DaimlerChrysler Powersystems. Unit directed by Hans-Ulrich Maik includes Mercedes-Benz, MTU, Detroit Diesel engines plus transmissions, axles & steering systems.
Eaton's restructuring of its transmission business will cut capital employed by 20% & significantly increase flexibility, says Chairman/CEO Sandy Cutler. In NAFTA markets, company will refocus production on transmission system technologies "critical to product performance & customer satisfaction." Salaried workforce in Truck Components business will be cut by 100 — in addition to 1,800 salaried & nonsalaried jobs eliminated since early 2000. Eaton proceeding with new plant in San Luis Potosi, Mexico, but completion will be postponed 6 months due to anticipated market weakness.
Eaton will discontinue its European "S" Series transmissions & may close plant in St. Nazaire, France. Medium duty transmission plant in Aycliffe, U.K., will be closed midyear & operations transferred to Gdansk, Poland, plant. Company expects to take $55 million restructuring charge this year, most in 1st quarter. Recurring annual savings estimated to reach $40 million, with payback period of 18 months.
The Maintenance Council of American Trucking Assns. changes name to Technology & Maintenance Council, will expand focus to cover on-board & off-board technologies. Qualcomm forms new heavy equipment & construction market group, based in Bethesda, Md.
CUTBACKS & SHUTDOWNSDorsey Trailers hires liquidation firm to help find buyer. It filed Chapter 11 in Dec., says it would prefer to remain an ongoing operation, but "all options must be explored." Wabash National to stop producing trailers for export & consolidate some domestic operations.
International's Springfield, OH, truck plant halts production on one assembly line 2 weeks in Jan. Company said earlier that plant employment may drop 40% long term with changeover to next-generation trucks. PNV files Chapter 11 bankruptcy, suspends services in late Dec. Goodyear offers early retirement to 700 U.S. salaried employees.
LABORUnited Auto Workers at Freightliner's Mt. Holly, NC, plant ratify new 3-year contract. Freightliner threatened to close plant & shift production to Mexico when negotiations stalled. In addition to wage & benefit increases, company agreed to launch new medium truck at the plant & keep production there barring "compelling economic circumstances."
RULES & REGSFederal Motor Carrier Safety Administration adopts new definition of commercial vehicle to include vehicles transporting property or passengers in interstate commerce with "a gross vehicle weight rating or gross vehicle weight of at least 10,001 lbs., whichever is greater." Previous definition was based only on GVWR. Change, aimed mainly at operators of small passenger vans, lowers jurisdiction threshold from 16 to 9 passengers.
EVENTSUsed Truck Assn. 2001 training includes truck sales fundamentals, selling skills & used truck management. Contact: (410) 602-2470 or www.uta.org. American Truck Dealers' annual convention & expo is April 21-23 in Baltimore. Contact: (703) 821-7116.
Truck Renting & Leasing Assn. annual convention is March 28-April 1, Miami. Contact: TRALA, (703) 299-9115. Automotive Parts Rebuilders Assn. annual brake clinic March 24-26, Louisville; fuel systems clinic, April 28-30, Grand Junction, Colo.; electrical clinic May 5-7, Reston, Va. Contact: APRA, (703) 968-2772.
Regional finalists compete for $160,000 cash & prizes in Stars & Stripes Show Truck Series Championships at Mid-America Trucking Show March 22-24, Louisville. 2001 Stars & Stripes truck show schedule: Petro Stopping Center, Florence, S.C., April 20-22; International Trucking Show, Las Vegas, June 27-29; TruckerFest 2001, Alamo Travel Center, Reno/Sparks, Aug. 16-19; Iowa 80 TA Truckstop, Walcott, Iowa, Sept. 20-22; Rip Griffin's Truck Travel Center, Terrell, Texas, Oct. 5-7. Series is sponsored by Chevron, managed by Newport Communications & National Assn. of Show Trucks. Contact: (513) 604-6810 or www.starsandstripesshow.com. Newport & NAST will also produce new Paul K. Young Memorial Truck Beauty Show at Mid-America, replacing Pride & Polish event of past years. It is open to all truckers & offers over $20,000 in cash & prizes.
HONORSNewport's RoadStar magazine is finalist in 3 categories for Jesse H. Neal National Business Journalism Awards: Best Single Issue (June 2000); Best News Coverage ("Fuel Prices Slam Truckers"); Best subject-related series ("New Hours-of-Service Rules"). Winners to be announced March 14.
PEOPLEFederal-Mogul names Frank Macher CEO; Charles McClure president/COO. Macher is former Ford exec & head of ITT Automotive. McClure was president/CEO, Detroit Diesel. Ludvik Koci to CEO Detroit Diesel from vice chairman. Jorma Halonen to president, Volvo Truck Corp., from sr. VP, Latin American operations. Robin Crawford to brand management VP, Volvo Global Truck, from corp. affairs dir., Mack Trucks. Ann Farrell to VP, purchasing & supplier development, International Truck & Engine; she was director of Next Generation Vehicle program & recently spearheaded a value-based initiative for International. Anthony McQuary to assistant gen. mgr., Kenworth Truck, from Renton plant mgr. Paul Penberthy to maintenance dir., Paccar Leasing, from TL/LTL market segment mgr., Kenworth.
ArvinMeritor names new leadership team: Sergio Carvalho to VP/gen. mgr., trailer products & suspensions, from VP/gen. mgr., specialty, bus, coach & govt. products; Rakesh Sachdev to VP/gen. mgr., braking systems, from VP/gen. mgr. trailer products; & Brad Arnold to VP/gen. mgr. axles & drivelines, from VP/gen. mgr., axles.
Jim Hutchinson, 44, named Newport Communications CEO, succeeding his father Robert, who died recently. Kent Powell continues as Newport president.
U.S. RETAIL TRUCK SALES REPORT
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