Truck rig demand seen tepid throughout 2010

Demand for heavy-duty truck rigs known as Class 8 vehicles will rise only slightly this year, dampened by continued soft freight volumes, an oversupply of trucks, and government mandates requiring engine upgrades to meet stricter environmental standards, research firm FTR Associates said today.

FTR, based in Nashville, Ind., said in a report that heavy-duty truck orders in 2010 will rise 3 percent from 2009 levels. The firm's forecast essentially repeats the same projection it had made a year ago about 2010 activity. Rig orders should pick up significantly in 2011, rising by 50 percent from 2010 levels, FTR said.

FTR said that while overall economic conditions are improving, a weak housing market and uncertain consumer demand indicate the recovery will be a slow one. Demand for new trucks will also be weakened by the large number of idle and underutilized rigs that could return to the roads should demand pick up, as well as tough engine emission mandates that took effect in January 2010 and have led to an increase in the cost of new engines, FTR said.

"Everyone in the industry would have been glad to see improvement in demand before now, but our forecast models showed us that wasn't likely until 2011," FTR President Eric Starks said.

The FTR forecast comes days after another Indiana-based transport research firm, ACT Research, said net orders for commercial trailers in February rose 168 percent from the same period a year ago and hit the highest level in two years.

Orders for dry vans rose by triple digits both sequentially and year over year, ACT said. Orders for refrigerated or "reefer" vans, which performed the best of the nine trailer categories tracked by ACT during the recession, posted a year-over-year gain of 45 percent, ACT said.

The improved order flows pushed total trailer backlogs to their highest levels in 17 months, which will support a gradual increase in trailer production rates, ACT said.