Long wait for new big rigs causes shipping headaches
Trucking companies are grappling with a limited supply of new big rigs.
With truckers rushing to place new orders, the backlog at semi-truck manufacturing plants has risen to nine months, the largest since early 2006, according to a report from The Wall Street Journal. That means a company placing an order now won’t take delivery until sometime around mid-2019. Normal factory backlogs for the industry are approximately five months.
“Orders we’re taking today and in the near-term, we’re already filling into the production slots in our fiscal 2019,” Troy Clarke, CEO of truck maker Navistar, said during a recent call with analysts.
A growing U.S. economy has increased demand for transportation services from retailers, construction companies and other businesses, but truck fleets say they are constrained by a shortage of both drivers and big rigs. Shipping costs have climbed as a result. An index that tracks trucking costs jumped more than 10 percent year-over-year last month, according to Cass Information Systems. It was the first double-digit increase ever recorded in the index’s 13 years, the Journal reported.
The American Trucking Associations (ATA) has estimated that truckers need 50,000 more drivers to meet demand, a record shortage for the industry. Companies need to hire nearly 900,000 drivers in the next decade, according to the ATA.
Fleets are also searching for new big rigs to expand shipping capacity or replace old vehicles. In July, North American firms set an all-time monthly record by ordering more than 52,000 trucks.
Navistar cited strong order activity in the first half of 2018 when it raised its full-year estimate for deliveries.
“We’re really bullish on 2019,” Clarke said, "and early indications show, it’s just going to be another strong year. GDP growth over 2 percent, which we’ve indicated means you’re adding to the truck fleet [and] you’re supplying above replacement demand level.”
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NAV | NO DATA AVAILABLE | - | - | - |
| CMI | CUMMINS INC. | 328.51 | -0.47 | -0.14% |
| PCAR | PACCAR INC. | 103.35 | -0.93 | -0.89% |
Jeff Allen, senior vice president of operations and specialty vehicles at Daimler Trucks North America, told the Journal that Daimler has recently begun to see supply constraints ease. The Journal also reported that supply-chain issues have contributed to the backlog, and suppliers have now added more workers to accelerate production.