Overdrive Extra

Max Heine

Economic news not all bad

| March 09, 2009

Following are items that came our way in the last several days. Hey, it’s not all gloom and doom. Of the four, two anticipate positive change in trucking:

 

  • The current glut of trucking capacity won’t last too long, says Chief Economist Bob Costello of the American Trucking Associations. He notes that thousands of fleets have gone belly-up, those truckload carriers that are surviving have been downsizing for a few years, and the driver shortage will return as soon as things pick up.
  • The overall job scene is deteriorating at a faster pace, reports The Conference Board. Its Employment Trends Index fell sharply in February. Over the past year, it has declined “faster than at any other time in its 35-year history, with the most severe decreases taking place since the fall,” says Gad Levanon of The Conference Board. “As job losses persist, the drop in overall earnings makes a rebound in consumer spending unlikely for the next few months.” 
  • Class 8 total net orders for all major North American truck makers fell to 6,167 units in February, the lowest order rate in over six years, says FTR Associates. “We have been anticipating this slow-down in order activity for some time now and expect orders to drop to 5,000 units or below over the next several months,” says FTR President Eric Starks.
  • A turnaround in the second half for truck sales? That’s what’s predicted by Jefferies & Co., a securities and investment banking firm. “The truck sector should be one of the first to recover — 2009 will mark the third year that the Nafta truck sector operates well below replacement demand, and the average age of the fleet is now near an all-time high,” write Stephen Volkmann and Chris Edwards in Barron’s. “Pent-up replacement demand coupled with more stringent (and expensive) emissions regulations in 2010 should drive some buying in the second half of 2009.” Their stock picks, in order: Navistar International, Paccar and Cummins.