Analysis: Could History Repeat Itself With Truck Capacity?
If you’ve ever taken a close look at any prospectus for an investment, you’ve seen the phrase cautioning, “past performance is no guarantee of future results.” That’s not bad advice any time you spend a large sum of money. And it’s also wise to remember the old phrase, “Those who cannot remember the past are condemned to repeat it.”
Will increasing freight demand and truck sales lead to an excess of truck capacity in the near future? Source: DAT
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The recent booming truck sales bring to mind a past we’d just as soon not repeat. When you look back just four years ago to 2014, a lot of heavy-trucks were sold. At the time, it was the best year since a record finish in 2006. Freight demand in 2014 had suddenly increased, and everyone was trying to move more cargo, as indicated in the amount of shipments as well as freight spending.
But when 2015 rolled around, things weren’t as rosy.
There was excess truck capacity in the marketplace, not just because there was less cargo to move, but also because fleets had more trucks. The result? Trucks not moving to their full potential, or even sitting on the fence, while freight rates dropped.
What’s interesting is that when you look at how the economy was performing during that time, it was always expanding, but at times the rate of expansion was less strong than at other times. When the gross domestic product was in a higher gear, which meant more goods were being shipped by truck, the freight markets either led the way or followed. When the GDP was lower, trucking followed the same pattern.
As 2017 moved forward, things once again improved in terms in the amount of freight, rates and the overall economy. Truck sales started booming again, and the economy turned …Read the rest of this story
