Swift's Moyes believes truck sales will not rebound enough to reach 135,000 this year, 250,000 in 2012

SWIFT Transportation chairman and CEO Jerry Moyes disagrees with predictions that Class 8 truck sales will reach 135,000 this year, 195,000 in 2011, and 250,000 in 2012.

Moyes said the higher quality of today's trucks and trailers enables fleets to operate equipment longer.

“Our company and our industry got started on a three-year trade cycle and went to a four-year cycle,” Moyes said.

The additional weight of trucks is another reason to postpone purchases. He said the trucks available today weigh almost 2,000 pounds more than the trucks he would replace.

“We're under huge pressures from shippers to keep the weight of our equipment down,” he said.

Speaking in “Fleet Executive Discussion — the Future of the Global Transportation Industry,” he also said he the improved quality of trailers will allow fleets to operate them longer.

“We used to trade trailers on six-, seven-year trade cycles,” he said. “Then we went to 10 years. Today, we have 10-year old trailers we're refurbishing, and we figure we're going to run them another five years. The new trailers we're bringing in today, we're figuring they're 15-year trailers. We spec them a little differently. Trailer manufacturers are going to have tough times with the numbers going forward.

“The other issue is, we used to have 3, 3.1 trailer ratios. The industry, due to better technology, trailer tracking, and techniques and systems, is cutting the trailer ratio to tractor down considerably, which means we can do more with fewer trailers.”

He said he believes container imports will recover slowly, with a 2.3% increase this year, 2.2% in 2011, and 5.5% in 2012 — and the same for intermodal volume, with increases of 1.2%, 2.5%, and 4.4% in the next three years.

He said trucking failures in the first quarter of this year are expected to be higher than they've been since the first quarter of 2001 (about 1,150) and will remain there in the second quarter, only slowing marginally to 800 by the end of the year.

Moyes said he sees tremendous growth in Mexico, particularly with a project that will double the size of the Nogales port in three years.

“Foreign direct investment in Mexico, by the US and other international firms, is rising because of the reduction in labor costs, the decreased risk in the length of supply chain, reduced transportation costs, simplified supply chain, and reduced inventories in the US,” he said.

He said Swift is “very excited” about what's going to happen in the next five to 10 years in technology.

He cited geofencing, in-cab scanning for all driver and customer paperwork, signature capture for all driver and customer needs, true in-cab navigation with traffic alerts/re-routes, road-restriction and speed warning, the ability to control the tractor remotely for security reasons, radio-frequency identification (RFID) fully integrated into equipment for security and maintenance purposes, smart-phones replacing in-cab computers for driver communication and training, and real-time video from the cab of the truck to monitor driver and road conditions.

Two other executives made presentations:

Infrastructure in a World of Change

Patrick Quinn
Co-Chairman, US Xpress Enterprises

Quinn said the nation has an aging infrastructure, as illustrated by the bridge collapse in Minneapolis and the demolition of an 80-year-old bridge linking New York and Vermont, creating major travel-time issues.

Next Page: The Next Decade

“These are some of the challenges we face because we didn't invest money and have a plan and move forward in a rational way,” Quinn said. “We're paying the price for that neglect. It's a daunting challenge to think outside of the box.

“We must face the reality that the current system is nearing the end of its life cycle. A long-term commitment and significant investments will be required to meet the challenges of the next 50 years.”

He said that the country's population will grow by 120 million in the next 50 years. Freight volumes from 1998 to 2020 will increase by 70%, and yet highway lane miles will increase by less than 3%.

“We're into almost a national gridlock,” he said. “There's no plan and no foresight and no champion to lead a result that's going to be satisfactory to the moving of freight and just the maintenance of our lifestyle. There's no easy answer.

“We need a transportation policy that works in tandem with our energy policy and promotes highway safety, and solutions that are environmentally safe and minimize the use of dwindling energy resources.”

He said there are estimates that we will have to spend $225 billion annually for the next 50 years to upgrade the existing system, and we're only spending about 40% of that today.

“No one likes tolls,” he said. “No one likes congestion pricing. A lot don't want an increased fuel tax. They don't like public-private partnerships. They don't want a user-based fee system, yet we've got alternative-fuel vehicles. Nobody wants a vehicle mile tax. But they all have to be on the table and talked about. It's a challenge for the industry and a challenge for our customers, but we have to face reality.

“In 1982, only Los Angeles had congestion of over 40 hours annually. Now almost every major city has it. That's wasted fuel and time. We need to address it in a better fashion and be realistic. Time is money, and fuel costs are high. Since 1982, the cost of congestion has grown 8% a year. In 20 years, if we continue that growth, the cost will be a trillion dollars annually, or 4% of GDP. It's clear we don't have to accept this.

“There has been a failure at all levels of government. We have to get beyond parochialism and fix the problems where they lie. The infrastructure is of paramount importance to our economy. If we want to end up being a second-tier economy, we can ignore the infrastructure like we've been doing.”

The Next Decade

Jim O'Neal
President, O&S Trucking Inc

He said today's challenges include rising equipment costs, equipment life that is not extended, and declining customer rates.

He welcomes a spirit of collaboration between vendors, carriers, and the industry — starting with the January announcement of the Department of Energy's 21st Century Truck Technology Partnership, with $115 million in grants going to OEMs to design better vehicle freight efficiencies.

He said we also need the development of new state-of-the-art products, new innovative industry standards and products available at the OEM level, and regulatory compliance that is met with customer-driven, energy-efficient products that enhance profitability.

“We really need to make some quantum leaps forward in some of technology we're using,” he said. “Small companies like mine have more challenges in staying up with the new things coming out. We're using an old Qualcomm system. It works fine. But we need to get to a mobile communication system that has multimedia availability.”

He said the current Auxiliary Power Unit (APU) has an additional 500 pounds, is expensive, is not OEM-available, and has a small diesel engine. The future APU needs to be efficiently priced, lighter, and non-carbon, with an OEM build-in.

“We'd like to see some breakthroughs and thoughts outside the box on how we're going to provide for refrigeration of product,” he said. “When you talk to the manufacturers of these units, neither of them could tell us they have anything on the drawing board that's within five to 10 years. It seemed like they're not ready to move forward with revolutionary technology.”

He said O&S has developed its own vision called MegaTruck, which reduces its customers' per-ton freight costs.

“As a SmartWay transportation partner, we are environmentally sensitive and use creative methods by which we may haul more freight while reducing our carbon footprint,” he said. “We identify origins and destinations that qualify as ideal MegaTruck strategic lanes, and maximize savings by using only MegaTruck for those specific lanes. We create a captive operation for the MegaTruck. We work with the shipper to maximize product weight per truck at 48,000 pounds. That has been music to the ears of our shippers. We maintain cost competitiveness to ensure cost savings and utilize any inbound opportunities to maximize cost savings.”

“This effectively removes one truck in 10 off the road. The demand for what we are providing is so high that we can't get it on the road fast enough. It reduces our carbon footprint. It's the right thing to do.”

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