Business

Purchasing a used tractor for your business is a difficult task any time. Purchasing one today is even tougher. High prices and low inventories have made the task of finding and financing a used truck much more difficult than in years past. At the same time, record high freight rates have made owning and operating your own truck an attractive proposition. As carriers complain about the shortage of qualified drivers available to hire, owner-operators benefit in two ways — some carriers are improving compensation packages for owners who lease on their equipment, while those who remain independent find more freight to haul. Those who are determined to buy a tractor right now should follow a simple process to make sure the truck is suited to the intended job. Unfortunately, the first thing most buyers do is look at a truck. Nice paint, shiny chrome and a like-new interior can help create a sense of desire, or at least comfort, before the buyer considers more important items. Before looking at a truck, get some information. Start with the mileage, but also ask about the vehicle’s accident history and maintenance records. Check for major repairs, even if they were done under warranty, and look to see if maintenance schedules were closely followed. Tires and brakes aren’t cheap, so you’ll want to get as many miles as possible before replacement. Those tires may be new — but used trucks often come with recapped tires. Recaps are fine in most cases, especially if the entire set was recapped together. However, you should be wary of recaps on mixed tire brand casings or different tread patterns. Find out when the last brake job was done and if rotors or drums were replaced or turned. When it comes to the engine, consider more than horsepower. For years, the 15-liter engine was the industry standard, but modern 13-liter engines can produce adequate horsepower with less weight and using less fuel. Some 13-liter power plants also require special oils and filters and can cost more to maintain; they may also detract from the truck’s resale value. Consider your routes, too. If you expect to be pulling heavy loads through mountainous regions, the 15-liter engine might be a better choice. Automated transmissions are becoming more popular than ever. They may cost a little more, but the savings in fuel cost that result from computer-controlled shifting should return the investment quickly. Keep in mind, however, that at resale time, it may be more difficult to find a buyer. If you prefer a manual transmission, the number of gears needed might depend on the intended use. Nine or 10 speeds is plenty for regular hauls; 13- or 18-speed transmissions provide more options for hauling heavy loads or traveling less-than-ideal roads. The third key point in the drive train is the differential, or “rear-end.” A key word in modern truck specifications is “downspeeding.” Trucks that are primarily used for long-haul interstate routes are often built with a lower axle ratio designed to keep engine RPMs lower at highway speeds. The axle ratio measures the number of splines, or “teeth,” on the ring gear of the differential divided by the number of splines on the pinion gear attached to the driveshaft. An easier explanation is that the ratio denotes the number of driveshaft spins it takes to turn the drive wheels one turn. The problem is, as axle ratios decrease so does the available torque available for power when needed. Simply put, a lower axle ratio provides better fuel mileage at the expense of power. That’s good if nearly all the expected driving will be on interstate highways pulling common loads. It’s not so good pulling extra-heavy loads or in stop-and-go traffic situations. In those cases, U-joints and other drivetrain components may wear faster. Another drivetrain consideration is whether the axle configuration is 6X4 (much more common) or 6X2. The six denotes how many wheel positions are on the vehicle; the second number indicates how many of them are powered by the drivetrain. In a 6X2 setup, only one axle “pushes” the vehicle. That’s good for fuel mileage but bad for traction in slippery conditions. Advanced driver-assistance systems (ADAS) are becoming more popular. Used trucks may be equipped with features such as lane-departure warnings or even steering assist, adaptive cruise control, side object detection and automatic braking. These systems increase driver safety, but they can also increase both purchase and maintenance costs. Most have sensors that can require replacement. A critical factor to ask about is whether the vehicle is covered by warranty. Some new truck warranties are transferable to the next buyer, and some truck dealers offer warranties on used models. In many cases, dealers work with a third-party warranty service, or you may choose to work directly with a service provider. Warranty coverage can offer some comfort, but make sure you understand the cost and any conditions that apply. For example, a purchased warranty may require that your truck be repaired only at certain facilities. Finally, it’s always a good idea to have your own mechanic check out a used truck. A trusted technician will know how to determine wear, and can often determine which parts have been replaced. A thorough inspection can disclose unreported problems or even accident damage you may not have seen. At a minimum, a third party should conduct a thorough DOT inspection on the vehicle. Most dealers will work with you to make sure you’re satisfied with the condition of the truck you’ll be depending on for a long time. After all of that, it’s time to admire that paint and chrome, and to climb up in the cab to check it out. You’ll be confident you’ve chosen the right piece of equipment and that it’s in the best operating condition it can be, allowing you to concentrate your efforts on running your business.

Thinking about starting your own business? Great! Despite what many people think about corporate behemoths like Amazon and Walmart ruling the world, the truth is the majority of jobs and economic activity doesn’t come from super-large corporations, but from millions of small “Main Street” businesses of every category. According to the U.S. Chamber of Commerce, 99.9% of businesses are defined as small businesses. Of the 30.2 million businesses in this category, 22 million are run by the owner and founder; the rest have less than 500 employees each. And a huge percentage of all small businesses are owned by women, with a growing percentage owned by women of color. Helping women — and especially women of color — get their wheels rolling in the transportation and logistics field is the goal of a new organization, Leading Ladies of Logistix (lead ingladiesoflogistix.com), founded by four female entrepreneurs who have been through the ups and down of the industry. “Leading Ladies of Logistix was an idea to put together a group of women that would help each other grow their businesses, sharing resources,” said Tristen Simmons, CEO and founder of South Carolina-based Lady Logistix LLC. “That’s exactly what Leading Ladies is. It’s an organization that helps women who are coming into the industry.” When Simmons met fellow Leading Ladies founders — freight broker Samantha Smith and freight corporate executive Vanessa Gant — at a brunch in Atlanta, the three were instantly of one mind when discussing the need for such an organization. They decided to join forces and lead seminars to teach other women the ins and outs of making it in the business. The fourth Leading Lady, Tawana Randall, joined the team after attending one of the seminars. Three of the four women have one vital thing in common: They all failed at their first run at the trucking business. They aren’t unique in this respect, as government statistics show almost one in four transportations ventures fail in their first year, and less than 70% survive to see Year 3. But in Simmons’ and Smith’s cases, their setbacks only motivated them to learn more in order to achieve success in the future. In addition, they are committed to the idea of helping other women who are enduring similar struggles. “In 2009, I started a trucking company with my husband and my father-in-law. We knew nothing about trucking,” said Simmons. “After about two and a half years, we started failing. So, I had to switch gears. I ran a courier service. I got into brokering as a freight agent and thought the entire time that if I could’ve connected with other women, they could’ve probably helped me, and I probably wouldn’t have failed the first time around.” Smith’s first business venture ran into regulation issues. “When we first got married, my husband was in the trucking industry with one of his friends,” Smith said. “The guy wanted to get out of the business and my husband was like, ‘Hey, would you be interested in buying the truck from him and staying in the business?’ I knew nothing about (the trucking industry) but I’m like, ‘Yeah, sure. Let’s do it.’ “We failed as well; we were put out of service because we didn’t understand the regulations and the requirements of a new trucking company,” she continued. “So that made me basically create my own standards, procedures, my own back office. I’m self-taught with everything.” Randall said she not only experienced the same problems as her co-founders, but was also frustrated by how hard it was to find help. She knew she was starting from nothing in terms of industry knowledge and entrepreneurial skills, and at one point tried to access college courses to fill the void — all for naught. Because of this, she sees a little bit of herself in the myriad women who attend her seminars and make up Leading Ladies’ enrollment. “We get women of all ages, and with COVID it shifted because people are looking for new careers,” Randall said. “I’ve had school teachers that went from teaching to freight dispatching; truck drivers that want to get out of the truck and get into something within the office. We have a different array of people that are looking for assistance and how to get into this industry the correct way. “Everyone is looking for something different to do, something else they can do,” she explained. “They’re looking to be entrepreneurs and change their career in their life at the moment. So, it definitely ranges in age and definitely ranges in experience.” After forming Leading Ladies in 2017, the foursome has grown the membership ranks to more than 4,500 women and has trained 20 mentors to reach even more, locally. The fact that they live in three separate locations — Simmons and Gant in South Carolina, Randall in Atlanta and Smith in Ohio — helped them quickly spread their group’s message across multiple markets. All Leading Ladies of Logistix services, including the seminars, are offered for free. “I definitely see the organization going into a direction of becoming a nonprofit,” Gant said. “I see it becoming a place for women to be educated on different areas of the industry where they can fit in and learn how they can make it profitable and also be able to give back to everyone.” Gant hopes to empower women in a male-dominated industry, and provide them with the safety and resources needed to succeed. “I see us being bigger than what we are now by having partnerships with some of the major brands in the industry,” she said. “Whether it’s the people who are providing services, the people who are providing equipment or the actual carriers, I see us eventually matching people together to help provide services.”

For trucking, business is still good as both freight amounts and rates continue to rise. Both measurements, however, are still constrained by COVID-related issues as well as other factors. Class 8 truck production remains limited, making new trucks harder to come by, and carriers are still facing difficulties finding enough new drivers to keep fleets rolling. “With inventories rebuilding, strong U.S. consumer balance sheets, booming capital goods orders and infrastructure stimulus in the pipeline, the fundamentals of the freight cycle remain positive,” commented Tim Denoyer, vice president and senior analyst at ACT Research, in a Sept. 28 release of the firm’s For-Hire Trucking Index. What Denoyer means is the signs are pointing to more freight and higher rates. Unfortunately, the trucking industry’s ability to handle that freight is reigning in the growth. “Despite the volume index slowing, end demand remains strong, and the slowdown is partly due to capacity limitations, from ports to trucks to trailers to drivers,” Denoyer added. While capacity limitations have an impact, many manufacturers are still experiencing problems obtaining needed parts and materials, especially semiconductors. Shipping ports also play a large role in current constraints. The container shipping industry, like the U.S. trucking industry, has dealt with COVID-19 issues since the pandemic began. While a driver who tests positive for COVID-19 may have to shut down a truck, a ship — transporting thousands of truckloads of freight — that has just one crew member tests positive may not be allowed to dock. Even if the ship is granted clearance, the port may be closed because someone on its staff tested positive. There are other port issues, too. California’s Long Beach and Los Angeles ports account for fully one-third of all U.S. imports. Those ports, however, are facing multiple issues that keep them from running at full capacity. As in many areas of the country, labor has been a problem on the West Coast. The unemployment stimulus offered by the U.S. government finally expired in September, too late to impact August employment numbers. Trucks are also an issue. Tough new truck emissions rules at California ports have made it impossible for owners of all but the newest trucks to gain access, while increased labor costs associated with California’s AB5 legislation have made carrier use of independent contractors much more expensive. The result is a record number of ships waiting at sea until dock space becomes available. As of this writing, more than 60 ships awaited unloading at southern California terminals. Other ports, including East Coast facilities, are also seeing delays, although not as severe. The bright spot in the port problem is that ships are getting bigger. Newer ships have the ability to carry more than 20,000 TEUs (20-foot equivalent units). That number equates to more than 10,000 truckloads of cargo on one ship, which means more trucks and rail cars are needed to transport the containers overland to their final destinations. Unfortunately, many of those containers that do make it into the ports are destined for rail transport to an inland destination. Just like trucks, trains need specialized chassis to haul containers. Those chassis are in short supply. A 200% tariff imposed on imports of Chinese steel all but halted manufacture of rail chassis, and the railroads can’t get enough of them to haul available containers. Shippers are responding by sending containers by truck or by unloading containers at rented warehouse facilities, reloading the cargo into van trailers for transport to destination. The American Trucking Associations (ATA) For-Hire Truck Tonnage Index increased 0.5% in August after months of decline, including a 1.1% decline in July. The August index was 110.3, indicating that freight levels were 10.3 higher than they were in the base year of 2015. “August’s monthly gain, while small, was the first since March,” said Bob Costello, chief economist for ATA. “It is important to remember that ATA’s tonnage data is dominated by for-hire contract freight, with a very limited amount of spot market freight.” According to the ATA release, freight levels in August dropped 0.5% compared to August 2020, when the economy was just emerging from the pandemic recession. Costello also noted that large carriers are operating a reduced number of trucks compared to last year. Both truck and trailer manufacturers are experiencing huge order backlogs, with the wait for new trucks now approaching 18 months. Used trucks provided an alternative for some carriers and owner-operators, but that supply has virtually dried up too. As older trucks are traded for the new units that become available, tractors trickle in to the used market, but many of those are spoken for and quickly sold. Drivers continue to be in short supply as well, as older drivers leave the industry and the supply of new drivers remains constrained. New FMCSA rules for the training of new drivers, including a federal registry for training providers, will take effect in February 2022. Designed to improve the safety and performance of entry level drivers, the new requirements are sure to further constrain the supply. The Cass Freight Index showed a more positive result for freight levels. According to the Cass index for shipments, August freight levels rose 4.8% over July numbers and were up 12.3% over August 2020 numbers. The Cass Index measures shipments across multiple modes of transportation, including rail, ship, air, pipeline, trucking and more. Cass also maintains an Index for freight expenditures, noting that dollars spent on shipping rose 9.2% in August from July numbers and were up 42.2% over August 2020 expenditures. So, while freight remains strong, the Cass report warns, “The dynamics of tight supply and exceptionally strong demand which have characterized the past year or so will not last indefinitely. The chip shortage continues to be a key fulcrum on which much in the world economy depends.” Coming months will have more of the same, with plenty of freight to haul and higher rates to haul it, but the number of impediments to growth seems to increase each month.

Many drivers know something about geography. They get a daily lesson as they travel across the country. Most of them learn quickly that the terrain they are driving through can have a huge impact on their day — and their safety. Mountain driving, for example, can present hard climbs, followed by steep downhill grades that can test the truck’s ability to slow and stop. But grades aren’t the only danger. Mountain weather can change from mile to mile as altitude changes. For example, it’s not unusual to begin climbing a mountain with clear visibility only to ascend into a layer of fog, if the hill is high enough, and then break into clear weather above the cloud. Temperature can be critical in mountain driving, as anyone who has driven the major passes through the Rocky Mountains can attest. Rain at the bottom of the grade can turn to snow at the top as the temperature drops. A wet road can quickly turn into treacherous black ice. Another feature of mountain driving is that it can impact the distance traveled. Drivers often complain that the trip miles they drive don’t often match dispatched miles. The old adage that the shortest distance between two point is a straight line may be true, but it’s hard to find straight lines on a mountain road. There are plenty of curves and switchbacks, plus hills and valleys, all adding to the number of revolutions a wheel makes for each mile of distance gained. Experienced drivers know to expect a few more miles and some extra driving time in mountainous terrain. Other types of terrain present their own problems. A trip across the plains can bring winds high enough to blow empty or lightly loaded trucks off the road or turn them over. Long, nearly straight stretches of road can induce boredom and fatigue. In winter, wind can result in snow drifts that can accumulate at alarming rates, even when the sky is clear. Snowstorms can turn into blizzards quickly as they are pushed by winds that have traveled hundreds of miles. Even a light snow can result in icy conditions as vehicles pack flakes onto road surfaces. Dirt and dust or plant debris from farm fields can blow across roads, reducing visibility and potentially causing a loss of traction. Even the sun can be a problem on flat terrain. Snow-covered fields reflect the sunlight, reducing visibility and contributing to eye fatigue. Wind can impact fuel mileage, too. Driving into a headwind can severely increase your truck’s fuel consumption, while driving with a tailwind improves fuel economy. Many drivers are unprepared for changes in altitude encountered when crossing the “flat” plains. A trip from Chicago to Denver, for example, doesn’t involve driving through mountains — but the elevation still rises nearly 4,800 feet, or 9/10 of a mile. Farther to the south, the change in elevation is more visible as drivers travel across the Llano Estacado, a visible cliff-like barrier between the high plains to the west and the lowlands farther east. Near the coast, water can become an issue, especially during inclement weather. The hurricane season, June through November each year, can bring severe storms that include storm surges that raise sea levels. Even smaller storms can dump torrents of rain after picking up water over the ocean or the Gulf of Mexico. After the storms pass, there may still be damage to roads and bridges or storm debris such as downed trees that impede travel. No matter what geographic conditions you’ll face, it’s wise to be prepared for anything. Keeping fuel tanks topped off in cold weather helps reduce water condensation in the tank and also ensures there will be enough fuel to keep the engine — and the heater — running if you become stranded. Every winter, roads are shut down due to snowstorms, often with vehicles stuck between exits, unable to proceed. It’s also important to keep a bottle or two of fuel treatment in your rig, along with a couple of spare fuel filters. Diesel purchased in a warmer location may not be blended for the conditions you’re driving into. A fuel filter that’s plugged up with gelled fuel will stop an engine cold. Some fuel treatments will dissolve the gelled fuel when poured into the filter, and also treat the fuel in the tank. Condensation in brake lines can block air flow. In the old days, drivers carried bottles of air-line antifreeze, primarily alcohol, and poured it into brake lines to dissolve ice crystals and get the air flowing. Modern trucks, however, contain plastic valves and other parts that can be harmed by the use of alcohol. Luckily, most trucks are now equipped with air dryers that remove condensation from air lines. These need occasional service, however, as they use a desiccant to absorb water. Over time, the desiccant loses its ability to work and must be replaced. Grease is important too — it fills voids where critical parts rub together and pushes dirt and pollutants out. It’s a good idea to get your truck serviced, including changing the air dryer desiccant and adding fresh grease, before winter weather arrives. Buying extra windshield solvent is a good idea, too, but look for quality products that protect to lower temperatures. Finally, it’s also important to prepare yourself for bad weather. You could be stuck on the side of the road without heat, or you could have to be outside to work on the truck or to walk for help. Always pack a jacket, hat and cold-weather gloves, even if you aren’t expecting cold weather. A sleeping bag could be a lifesaver if you’re stuck for a while. Sunglasses are a must, too. Tinted windows and visors help, but there are times when sunglasses are needed. Every driver should have an emergency food supply that can provide enough nutrition for a day or two. Protein and fitness bars are easy to find and don’t take much space. Some bottled water is a good idea, too, since dehydration is a common cold-weather problem. Driving conditions, including weather, often change with the local geography. It’s wise to prepare for any conditions.

STUTTGART, Germany — During a virtual general meeting of Daimler AG on Oct. 1, an overwhelming majority of shareholders voted for a “historic” realignment of the company, according to a statement released by Daimler. The spin-off of the truck and bus business and the subsequent listing of Daimler Truck Holding AG as an independent company on the Frankfurt Stock Exchange were approved by 99.9% of the capital stock represented for the resolution. In addition, 99.89% of shareholders voted to rename Daimler AG as Mercedes-Benz Group AG, effective Feb. 1, 2022. The new Mercedes-Benz Group will focus on passenger vehicles with the brands Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ. The two measures must now be entered in the Commercial Register; both companies can then create “decisive value added” for all stakeholders, the statement noted. Two current members of the Daimler supervisory board, Marie Wieck and Joe Kaeser, will step down from their positions and join the supervisory board of Daimler Truck Holding AG. As their successors in the supervisory board of Daimler AG, the shareholders elected Helene Svahn with a majority of 99.34% and Olaf Koch with a majority of 98.60%. A total of 56.45% of the share capital was represented during the virtual meeting.

The leaves are turning, and in some areas summer heat is giving way to crisp fall nights. The changing scenery is a welcome sight to many — but it’s also a warning that winter is rapidly approaching. In fact, in some parts of North America, it’s already here. Experienced drivers know winter presents its own set of driving rules. Unfortunately, even experienced drivers can be surprised by that first snowstorm. Even worse, winter isn’t always heralded by falling snow; sometimes, it’s sleet or freezing rain. It’s a good idea to review winter driving practices before encountering that first cold-weather hazard. At the first hint that your truck’s road traction might be compromised, slow down. When you see vehicles that have run off the road or spun out, it’s a good indication there are patches of ice or snow on the road. The appearance of brake lights or emergency flashers on the road ahead could indicate a problem area, so be prepared to slow down or stop. The pavement can appear dry and clear — until you round the next curve. In fall and early winter, the ground underneath the road surface still may still hold some heat from the summer sun, keeping the road surface warm enough to melt a light snow. On the other hand, bridges and overpasses, without that warm ground underneath and with the wind blowing, are usually the first to freeze. Be prepared when approaching bridges and overpasses. If you’re suspicious about the road surface, hold the wheel steady, without braking or accelerating, as you cross. Altitude changes mean temperature changes. More than a few drivers have discovered that raindrops at the bottom of a hill can turn into snowflakes near the top. If you’re driving in the mountains, be prepared for conditions to change quickly. Changes can also occur as the sun sets. A day that’s been warm enough to keep the snow melted can quickly turn into a night cold enough to freeze that snowmelt into a treacherous sheet of ice. Adding more distance between your front bumper and the vehicle ahead is always a good idea. During inclement weather, leaving a bit of extra following distance can give you more time to react to hazards ahead. When roads are wet, and especially when the temperature is near freezing, test your brakes periodically. A gentle application while on a straight stretch of road will give you an idea of how your truck is reacting. If you do have to stop on a slippery surface, remember that modern vehicles are equipped with anti-lock brakes. You shouldn’t need to pump the brakes, as the braking system does this for you at a rate much faster than you could ever achieve. If, however, your vehicle begins to skid, you may have to release the brakes and reapply pressure. Some of the features of your vehicle that are designed to make life easier can become deadly when roads are slippery. Cruise control can’t sense that there is ice ahead and will do what it’s designed to do — maintain the speed it is set for. Unfortunately, that speed may be totally wrong for the road ahead. Likewise, engine brakes can cause drive tires to break traction and skid, possibly causing a jackknife. Depending on the conditions, you may be able to set progressive engine brakes at a lower level if you’re descending a grade and need the braking power. If they aren’t needed, turn the engine brakes off. It can be hard to tell when rain starts freezing. One of the easiest ways to tell is by looking for road spray from the tires of other vehicles. Wet roads create road spray. If there isn’t any spray, that “wet” road could be iced over. Sometimes ice buildup on mirrors and brackets is visible. Obviously, if you see ice forming, you should assume it is also forming on the road surface. Keep an eye on the radio or CB antennas of other vehicles, too. Normally they will move with the wind stream, being pushed straight back. If they start moving wildly or in a circular motion, they may be coated with ice. Visibility can also be an issue in winter. Blowing snow, road spray and windshields covered in dried ice-melting compounds that were applied to the road surface can make it more difficult to see. Keep windows and mirrors as clean as possible, and don’t forget to stock up on washer fluid. On winter days when the sun is shining, the glare coming off snow-covered fields can be blinding. Because of the angle of the earth to the sun, the sun appears lower on the horizon, and sun visors are limited in how they can be positioned. A pair of quality sunglasses can improve your vision, increasing your safety while providing comfort for your eyes. It’s a good idea to stay up to date on weather reports for the areas you’ll be driving into. There are a number of phone apps that provide this information, and some provide alerts when bad weather is expected. Online and phone resources can provide time-lapse video that projects the trajectory of storms, providing a better understanding of what’s ahead. Some AM-FM radios or CB radios have weather “bands” that pick up weather reporting from the closest airport. When possible, a review of expected weather should be part of your consideration before accepting a load. Weather will certainly impact travel time and may determine if you get there at all. Finally, park your truck when conditions are unsafe. Driving on icy roads is always dangerous. Snow-covered roads aren’t quite as slippery and may be traveled safely at reduced speeds, but consider your trip plan. You may find it beneficial to take a break while you wait out the storm; it may be possible to travel at normal road speeds once you get back on the road. Regardless of any time crunch you’re under, when it isn’t safe, park it. No load, no customer and no job are worth your life. Careful trip planning, followed by following safe driving practices, will help you survive winter weather.

U.S. sales of Class 8 trucks remain subdued in August with sales of 18,176 reported by manufacturers, according to data received from Wards Intelligence. The August result was 8% higher than July sales of 16,824 and 2.8% better than August 2020 sales, both well below normal production levels. In August 2020, only 17,685 Class 8 trucks were sold as the industry was returning to normal after COVID-19 shutdowns and restrictions. For comparison, in 2019, an average of 23,032 Class 8 trucks were sold each month, with 23,466 sold in August of that year — 5,290 more than this year for a 2021 decline of 22.5%. There isn’t a direct correlation between sales and production, of course. When assembly lines are running at full capacity and sales aren’t keeping up, excess inventory builds up at dealers and factories. For months, the opposite occurred in the U.S. as truck sales exceeded production, relying on existing inventories to make up the difference. Currently, there isn’t much inventory left to draw from, and what’s left is often designed for unique applications, such as off-road. In the meantime, the backlog of orders extends well into next year, and build slots for 2021 models are filling fast. “The order average, breaking through 35,000 per month in July, is currently pointing to monthly build volumes that should be approaching 30,000 units per month. Instead, production through July has failed to crack the March build rate, and July build totaled just 14,920 units, or 710 units per day, as the OEMs resorted to down days and weeks,” said Kenny Vieth, president and senior analyst at ACT Research, regarding the Sept. 10 release of ACT’s latest “North American Commercial Vehicle OUTLOOK.” An earlier ACT release, on Sept. 2, reported 31,900 North American orders in August, more than double the July build rate of 14,920 trucks. Shortages of parts and materials has been the biggest culprit. Semiconductors are in short supply around the world. Consumer electronics sales during the COVID-19 pandemic depleted existing supplies while plants were shut down due to the pandemic. Once the plants reopened, the demand far exceeded production abilities, and competition for chips became fierce. “In the current period of near-record demand for commercial vehicles of all stripes, the story the past few months has shifted from one of abundance to one of constraint,” Vieth said, noting that semiconductors are only one of many holdups in the supply chain. “In actuality there are scores of parts that continue to be impacted by the pandemic, by the lingering impact of steel tariffs, and even by the February storm that incapacitated Texas and shutdown swathes of the U.S. plastics industry for two-plus quarters,” he said. Manufacturers responded by partially manufacturing vehicles, omitting certain components with plans to add the missing parts, once they became available, to complete the build. Manufacturers of trucks in classes 5, 6 and 7 had the option of diverting chips to Class 8 models. This appears to have happened in August. For the year to date, Class 8 trucks have represented 70.2% of the Classes 5-8 market. In August, that percentage increased to 72.8%. Freightliner had the largest change, with sales of Class 8 trucks in August representing 72.4% of monthly sales, compared to 64.7% for the year to date. Truck builders aren’t the only manufacturers dealing with slowed production. Their suppliers also depend on deliveries of the parts and materials they need, including those pesky semiconductors. Another reason for shortages of vehicle components is the rapidly increasing cost of container shipping. Parts and materials from Europe or China — including everything from electronic control units to floor mats and mattresses — are used in new Class 8 truck production. COVID-19 closures, weather incidents other issues have resulted in huge backlogs at ports around the world. The resulting delays have caused a capacity imbalance, with more demand for containers than for the ships to haul them. Just as in trucking, when demand exceeds capacity, shipping rates rise. According to the Drewry World Container Index, the composite cost of shipping one 40-foot container topped the $10,000 mark Sept. 9, increasing a whopping 309% over the price during the same week of 2020. According to Drewry, the cost of shipping a 40-foot container from Shanghai to Los Angeles rose to $11,569 in the past week, nearly eight times higher than pre-COVID levels. Those looking to the used truck market to find equipment are likely to find similar issues with available inventory. “At the heart of the issue is used truck inventory, which continues to lose traction,” said Steve Tam, vice president of ACT, in a late-August release. “Underscoring the point, sales were also down year over year.” Used truck prices for units sold in July lagged only a few dollars behind those sold in June, but they showed a significant 46% increase from the average price in July 2020. That doesn’t necessarily mean the price of all used trucks rose 46%, but it could indicate that a different mix of trucks, including newer models, left the market this year. On an individual OEM basis, only Kenworth and Peterbilt saw declines in sales for August from July numbers. Kenworth’s 2,861 trucks sold in the month were 5.6% lower than July sales of 3,031 but 20% better than August 2020 sales of 2,385. Peterbilt’s 2,605 sold declined by 130 trucks (4.8%) from July but bested August 2020 sales of 2,428 by 7.3% International sales of 2,867 represented an improvement of 244 trucks for a 9.3% increase. Compared to August 2020, sales increased by 588 (25.8%). Volvo sales jumped by 305 trucks from July to August, an increase of 34.3%. Compared to August 2020, however, results were down by 678 trucks (36.2%). Mack’s 1,495 trucks sold in August topped July sales of 1,252 by 19.4% and bested August 2020 sales by 46.4%. Freightliner sold 6,646 trucks in August, 13.7% better than July but 8.5% worse than August 2020. Market shares for the year to date are as follows: Freightliner, 38.2%; Peterbilt, 15.3%; Kenworth, 14.7%; International, 12.6%; Volvo, 8.7%; Mack, 7.9%; and Western Star, 2.6%. Both production and sales of over-the-road Class 8 trucks are expected to remain constrained for the next few months.

If you’re planning to give some lavish gifts during the holidays this year, the good news is you’ll have more money to spend. Freight rates remain near record levels in many lanes. The bad news? You’d better shop early, because the products you want may not be available when you want to buy. For July, the American Trucking Associations (ATA) reported a decline of 1.2% in its seasonally adjusted For-Hire Trucking Index. The drop follows a 2% decline in June. The ATA index compares freight volumes reported by its membership with data from year 2015. The July index of 109.8 indicates that freight volumes in the month were 9.8% higher than they were during the same time period in 2015. Bob Costello, ATA’s chief economist, spread the blame in an Aug. 24 release, saying, “Not only are there broader supply chain issues, like semiconductors, holding tonnage back, but there are also industry-specific difficulties, including the driver shortage and lack of equipment.” Costello was lamenting that the economy, poised to rebound from COVID restrictions, is held back by shortages of semiconductors and other products and supplies. The impact is multiplied for the trucking industry because lower production means there’s less freight to haul. The production of new trucks, necessary to replace outdated equipment, is also reduced. So, while manufacturing is held back from full production, there is still more freight to haul than available trucks to haul it, keeping rates at high levels. ACT Research’s August “Commercial Vehicle Digest” reported that the U.S. economy is strong — but so are the constraints that are holding up production. “US GDP growth is projected at 6.2% this year and next,” said Kenny Vieth, president and senior analyst at ACT. “That bullish outlook is predicated on solid freight metrics and consumers who continue to spend at relatively higher rates on goods, as well as millennial demographics, record savings and wealth, and pent-up housing demand that all bode well for continued strength in freight-related economic activity.” Production of new Class 8 trucks is currently backed up well into 2022, with about an 18-month waiting period for a new truck ordered today. A shortage of drivers is currently a hot topic in trucking media, too. Carriers are having difficulty hiring enough drivers to keep their trucks rolling, and the problem is reflected in their financial statements. Driver pay and working conditions are often cited as issues that are holding up the hiring of more drivers. However, for the increasing number of owner-operators, an available truck with a driver is a good thing to have available in the current freight market. Production isn’t the only thing that’s holding up the market. The U.S. imports a huge amount of cargo from the far-East, especially China. Like trucking, the cargo ship industry is having capacity issues of its own. An Aug. 18 article by University of Plymouth lecturer Stavros Karamperidis on TheConversation.com pointed out that China has eight of the Top 10 busiest shipping ports in the world, and that none of them are running near normal capacity due to COVID restrictions. “From Shanghai to Hong Kong to Xiamen, ships are in long queues to unload,” Karamperidis explained. “The U.S. west coast is also seeing bad congestion, with many ships anchored in California’s San Pedro Bay, awaiting access to the ports of Los Angeles and Long Beach.” These ports are having more difficulty now than they did in 2020, when COVID was more widespread. “Now that many countries have vaccinated large numbers of people and their economies are reopening, demand has bounced back with a vengeance, and ports are not coping well,” Karamperidis noted. Additionally, weather events have caused the closing of some ports. One result is that, just as in trucking, cargo ship rates have shot upward. Karamperidis claimed that the rate for moving one 40-foot container from China to a port in Europe is currently running about 10 times the normal rate. Another intermodal issue that could have an impact is the availability of chassis to haul containers once they’re unloaded from ships. Chinese company CIMC, accused of dumping chassis on the U.S. market, was sued by a coalition of five U.S. manufacturers for unfair trade practices. The verdict was a 221% duty imposed on CIMC imports for the next five years, more than tripling their price. That’s good for U.S. manufacturers, but time will be needed for those companies to build enough chassis to make up for the loss of the Chinese chassis, creating a short-term chassis shortage. Some West Coast carriers have resorted to unloading inbound containers, reloading the freight onto dry van trailers for inland shipment. The increased need for truck capacity will help keep freight rates high. The Cass Freight Index for Shipments reported a 3.1% drop in freight levels for July, but levels were still 15.6% higher than July 2020. While the amount of freight was up 15.6%, the amount paid to haul it was up 43.1%, an indication of how rates have improved over the past year. According to the Cass report, much of the decline in freight volumes came from the railroad and less-than-truckload markets. The Cass report measures shipping volumes in multiple transportation modes, including ship, air, rail, pipeline and barge, in addition to trucking. The Cass report mentioned difficulty in getting both trucks and drivers as factors in the trucking statistics but also pointed to the effect of the government stimulus dollars wearing off as time passes. On the truckload side, Cass reported that volumes fell 0.8% from June levels. Tim Denoyer, ACT’s vice president and senior analyst who writes for Cass Info, said, “Freight demand fundamentals remain strong, based on a cash-flush U.S. consumer balance sheet, tight inventories, and an industrial sector struggling to grow into record orders with fiscal stimulus likely on the way.” At some point, shortages of parts such as semiconductors will be alleviated and production of product, and the trucks to haul it, will increase — if the resurgence of COVID doesn’t shut everything down again. For now, the times are still good for trucking.