Trucking Boom?

Getting With the Program

Are we in the middle of a trucking boom? The rocketing figures released this week for the first quarter of 2018 would suggest there is plenty of confidence out there and trucks are walking off the show room floor at a fair clip.

The numbers are impressive, new records were achieved in a number of market segments as well as overall figures. It may be difficult to recall this point ten years ago, the last time the truck sales record for the quarter was broken. The sales of trucks in the first three months of 2018 were 8,675 units, 408 above the record set in the first quarter of 2008, according to the latest truck sales figures released by the Truck Industry Council.

In fact, at the time, the numbers being recorded back then were a bit of an anomaly. The subprime mortgage crisis was already starting to unfold in the US and the financial institutions were already having to work hard to keep their heads above water. The global financial crisis was inevitable by this point, but it was only just dawning on those in the know in early 2008.

In Australia, it was full steam ahead. The mining boom was in full swing. Iron ore prices and coal demand was at record levels and this ever increasing economic activity was feeding through to see WA and Queensland growing fast, with the rest of the economy following on behind.

By the end of 2008, the Australian truck market hit 36,620 overall. It was reaching dizzying heights. Truck production was struggling to keep up. In fact, in December 2008 Kenworth sold four fewer trucks than they did in March 2018.

That level of production was squeezing the Bayswater plant in Victoria to its limits back then. Today, the production system and the trucks have been altered and streamlined to prepare for these kinds of numbers. It’s not a breeze knocking out 216 trucks from the confines of the Kenworth plant, but it is within its capacity.

For the importers of trucks, the problem is different. Ordering more than a few months in advance takes a lot of guesswork. Order too few for the actual demand and your customers are disappointed and will go elsewhere, order too many and your job is on the line because the business can’t carry too much inventory.

We should have seen this increase in demand for trucks coming. Trailer makers are always a good indicator of the prevailing winds and they have been talking about lengthening waiting list for a good while.

So, truck and trailer sales are going up and the equipment manufacturers are struggling to keep up. Clearly, the road transport industry is growing fast and needs more gear. Good news for the economy and the transport operators.

Is it good news for safety? With all of these new trucks flooding into the fleets, is the average age of the truck fleet going down? Probably not. New trucks are coming in, but older equipment will also be coming back into operation to make up for the long waiting lists for some trucks and trailers.

Trucking Boom?

When the economy comes off the fast growth cycle, new trucks will be available in good numbers, just at the point when trucking operators will be seeing revenues slow and new acquisitions become less attractive. Best try and do the job with the current gear.

So, the cycle continues. If the government is sincere about wanting to improve safety on our roads, then one way of achieving this would be to incentivise us when things aren’t in boom times to upgrade the fleet. This is one of the solutions among many, like training car drivers how to behave around trucks, improving the road infrastructure, making sensible planning decisions around freight routes and so on and so on….