Continued economic growth, low interest and inflation rates and strong carrier profits all contribute to the rosy outlook, he said.
Ninety-five percent of fleets said business in 2006 will be as good or better than last year’s, and half said freight will increase, said McReynolds, citing results of a survey conducted by FCC Equipment Finance, a Caterpillar company.
Most fleets said capital equipment budgets will stay at present levels, while 25 percent said they will increase.
At the same time, 75 percent said truck pricing will increase; one-quarter said these increases will be significant. Estimates are that truck prices could go up another $10,000 in 2007, McReynolds said.
Looking toward the introduction of new low-emissions engines in 2007, many fleets responding to the survey said they will deal with higher truck prices and operational costs by extending trade cycles.
When selecting engines, reliability and fuel economy are fleets’ biggest concerns, McReynolds said. “Some 2002 engines have not performed lately,” he said. “The more complex engines get, the more fearful the market becomes.” Customers will rely on those who have taken care of them in the past, he said.
While all engine makers have had difficulty getting trucks with ’07 technology into customers’ hands, fewer problems are expected than with 2002 engines because engine makers have had more time to prepare this time around, McReynolds said.
Another challenge is the availability of ultra low sulfur diesel to use in testing, he said. Some customers are paying up to $4.35 per gallon for ULSD, and Caterpillar has subsidized customers to help them test, McReynolds said.
Experts predict ULSD will have 1 percent less energy content than traditional diesel, which will result in about a 1 percent fuel economy penalty, McReynolds said. How the fuel will perform in cold weather and how it can be stored to avoid contamination are other concerns, as are infrastructure and supply challenges faced by petroleum companies, McReynolds said.
Faced with these challenges, fleets are doing the same thing they did before the introduction of the 2002 engines, McReynolds said: Pre-buying trucks with existing engines and buying used, to delay as long as possible buying the new technology. “This puts added pressure on the parts and service aftermarket,” he said.
A shortage of about 45,000 technicians will contribute to the problem, McReynolds said. At the same time, dealers and repair shops will need to be large enough to take advantage of economies of scale in training, equipment, insurance, etc., “in order to work on these expensive new trucks,” he said.
International Brings Back PayStar Name
All International Truck and Engine’s 5000 Series trucks will now go by the name PayStar, the company announced.