Sales of Class 2-8 truck chassis are highly correlated
with capital expenditures, so it is not surprising that
Class 2-8 chassis sales declined on a year-to-year basis
from Q3/16 through Q1/17. They started rising again in
the second quarter along with capital expenditures.
Market segmentation reveals that the decline from
the second half of 2015 to Q1/17 was more about conventional cab chassis than other segments of the work truck
industry. Nonconventional cab chassis (strip, cutaway
and low-cab-over-engine) sales grew in 2016 and the first
half of this year. Conventional cab chassis sales fell 3.8%
in 2016, and another 0.3% in the first half of 2017. In
2016 and 2017, the largest percentage declines occurred
in Classes 2 and 8. Sales were also down in Classes 6
and 7 in the first half. However, gains in Classes 3-5
balanced the declines. Since nonconventional sales
grew, total chassis sales were up 1.3% through June.
While there are good reasons to be positive, economic
factors may hinder growth. Primarily, a labor shortage
is affecting most U.S. industries. Unemployment stood
at 4.2% in September, and the labor participation rate
was growing. But a large imbalance remains between
the skills companies want to hire and the skills available for hire. According to the Department of Labor, as
of September there were about six million unfilled job
openings. This trend has contributed to the economy’s
inability to perform at its potential, and while economic
growth is expected at least through 2018, the rate of
growth will likely remain about 2.5%.
The work truck industry managed to continue growing in 2016, as measured by sales of truck chassis and truck equipment. However, the rate
of growth was 0.5%. In Q1/17, chassis sales fell from the
same-quarter, previous-year, at a rate of - 2.2% before
turning around in the second quarter with growth of
4.7%. Through the first half of the year, commercial
truck chassis sales were up 1.3%. As forecasted, the rate
of growth accelerated in the third quarter.
One reason for the recent improvement in the
commercial truck chassis market was the long downturn in capital expenditures on equipment troughed in
the first quarter. The growth rate of capital expenditures
decelerated sharply in Q2/15 and became negative in
Q1/16. The year-to-year growth rate of capital expenditures then remained negative through Q2/17.
The Cyclical Expansion Continues:
Commercial Truck Industry Will Fare Well in 2018
BY STEVE LATIN-KASPER
The trucking industry continued its slow growth pattern in 2017. Steve Latin-Kasper of the National
Truck Equipment Association discusses factors like the labor shortages and infrastructure delays that
have hindered growth. He provides a slightly rosier outlook for 2018.
Director of Market Data
and Research, National
Despite a decline in state/local government expenditures on
construction in 2016 and 2017, expenditures on equipment
continued rising. However, as of Q2/17, the equipment
expenditures rate of growth began to decelerate. Although
expected to continue growing through the first half of 2018, the
decline in construction expenditures will eventually lead to a
decline in expenditures on equipment related to construction,
such as trucks and truck equipment.