Speaking at ATA's National Accounting and Finance Committee in March of 2008 Kevin Knight, Chairman and CEO of Knight Transportation explained that the 2006 pre-buy of tractors added excess equipment into the market and caused equipment utilization to drop by 5-6% for carriers. Much of the Trucking Capacity decline we have been experiencing is the result of our own buying initiatives.
In July of 2006 I wrote a Letter to the Editor of Transport Topics ( letter ) that addressed the same issue - over buying of fleet can lead to capacity issues and depressed used truck pricing.
The point is this: As an Industry, we created much of the over capacity that plagues us today (obviously the economy plays a large part also).
The follow up question is this: As an Industry, are our current actions laying the ground work for future under capacity?
Consider the following:
- Trucking companies are selling equipment overseas to reduce depreciation/lease costs and improve revenue/truck performance
- Governor setting set backs designed to conserve fuel have reduced driver productivity
- Truckers have significantly reduced orders for new equipment - Truck manufacturers report greatly reduced sales for the first 6 months of 2008 compared to same period last year (Sterling down 48.1%, Volvo down 17.5%, Freightliner down 32.9% to name a few)
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