In North America, Class-8 truck (heavy duty) truck orders have fallen 33.7%YoY in June 2016. Truck activity is an important barometer of economic activity. The world’s largest truck maker, Daimler, have trimmed production forecasts from -10% to -15% in 2016 and have retrenched 1,250 workers to cope. FTR President of Commercial Vehicles Don Ake said,
“Fleets do not need to order many trucks in the current environment because in most cases they have enough trucks to handle the freight. Freight demand is still sluggish due to the build-up of business inventories…Dealer inventories of Class 8 trucks remains bloated, so the only truck orders now are mainly for replacement purposes, with preferred specifications…It will be a challenge for the OEMs to schedule production through the summer. Extended vacation shutdowns are anticipated.”
Derek Leathers, road transport giant Werner’s chief executive, said that contract negotiations with shippers this year have been the most aggressive he can remember.
“We’ve seen shipper negotiations that have demanded in excess of 10% in rate reductions…They’re essentially asking folks to operate their business at a loss. Carriers will do that for a period of time, but there are negative long-term outcomes to that.”