What’s in Print
HDAW2019-CV-outlook-panel.jpg
From left, Ken Davis, Greentree Advisors; Roger Nielsen, Daimler Trucks NA; Dean Engelage, Great Dane; and moderator Chris Patterson discuss the CV outlook.

CV outlook: The market’s hot, the technology’s hotter—and OEMs aren’t cooling off on aftermarket support

HDAW 2019 coverage

Exactly what the future holds for commercial vehicles is anybody’s guess.

From emerging technologies, like automation, electrification and telematics, to the changing supply-chain support structure and ramifications of a record year for truck and trailer orders, there are too many variables in play to predict what’s going to happen in 10 years, five years—or even next year.

But at least one manufacturing executive has a clear vision for what tomorrow’s smart trailers will look like.

“Well, it’s got a Great Dane on it,” quipped Dean Engelage, president of Great Dane.

Engelage was part of a question-and-answer panel, along with Roger Nielsen, president and chief executive officer of Daimler Trucks North America (DTNA), and Ken Davis, founder of Greentree Advisors and formerly president of the Eaton Vehicle Group, that touched on these topics and more during the Heavy Duty Aftermarket Dialogue session “The Real World View—A Global Perspective.”


Record run

Truck and trailer manufacturers are coming off a record year for orders, production and sales, with trailer manufacturers alone reporting more than 366,000 orders for trailers and container chassis in 2018 to Trailer/Body Builders for its annual, industry-leading Top-25+ Trailer Output Report.

The panelists all agreed they don’t see the run ending soon.

Engelage said 2019 is coming on as strong as last year, and stronger in certain categories, including its last-mile truck bodies.

“It’s encouraging,” he said.

“The general feeling is we’re going to watch closely. We’ll have cancellations. We haven’t had any substantive cancellations, so far, in the last several months, but there’s that watchful waiting, and hoping things continue to solidify. But backlogs are out toward the end of the year and we’re delighted.

“It’s been an unprecedented long run for us.”

Nielsen echoed the sentiment, saying DTNA experienced a 40% increase in orders between January and June last year, with the total number of Class 6-8 trucks produced north of 450,000. He’s hearing OEMs will hit a similar number in 2019, and DTNA already enacted measures to deal with “panic” orders.

“Between July and August we cancelled almost 58,000 orders we didn’t see as credible,” Nielsen said. “So we put a process in place now where everybody who comes in gets asked two or three times, ‘Is it legit, does the customer really need them?’ and if he’s planning on trading trucks in, or taking trucks out of his fleet, ‘Do we know the VIN numbers, and the mileage and condition of those trucks?’ and so on.

“So we’ve put good processes in place to keep everybody honest.”

Davis said current build rates support the idea OEMs will produce more trucks and trailers in 2019 than last year—even if that’s hard to fathom.

“The industry should enjoy these really robust times,” he said.

“There were 320,000 or so (Class 8) units built last year, and we’ll probably see a very similar or slightly increased build rate, and Class 6/7 will be well over 150,000. So everybody’s going to watch the order-intake trend—the net orders, which are really critical because of order-cancellation issues, if we do see them, and we have in other cycles. So this will be a very strong year, in our opinion.

“The question is, when does the downturn start, how big is it, and is it into 2020 or 2021?”

Engelage said that’s undetermined.

He’s expecting a softening in 2020, with current forecasting showing a 10%-15% reduction in trailer orders. But he’s more concerned with how Great Dane will allocate capital in the near future as the company attempts to keep up with emerging technology and trends, including last-mile deliveries.

In terms of research and development, their primary focus is on trailer telematics.

“For us, it’s just capacity management right now, and making sure we have the right capacity in the right areas,” Engelage said.


Automation

Automation is a hot topic, and this panel didn’t shy away.

Nielsen said autonomous trucking is a consideration for every business in the heavy-duty space, with demand for development driven by the growing driver shortage—accelerated by e-commerce—and the goal of making the industry safer, so he’s excited about the technology’s direction.

He’s not expecting to see driverless trucks on the highway for at least 10 years.

“Unlike the business case for electric trucks, there is a strong case for automated trucking, in this case meaning there are times and periods when the driver’s attention to the steering wheel doesn’t have to be great,” Nielsen said. “So the business case is strong, but the technology’s not there. There are a lot of inventions that have to be imagined before we get to the next level of automation.”

Level 2 automation is coming, he said, with OEMs currently developing technology like lane-departure control that can keep a truck centered in its lane, helping avoid sideswipes and off-road accidents.

But how quickly Level 4—where “Look mom, no hands!” no longer impresses—arrives also depends on the impact of government regulations, which hinges on public acceptance, and development of the transportation infrastructure, which President Trump recently said already needs rebuilding.

When DTNA conducted a demonstration in Nevada, they had to receive permission to repaint the highway lines, which help guide the autonomous trucks—and then go back and erase them the next day.

“We won’t move forward unless we have the acceptance of the regulatory agencies and society, so we’re investing quite a bit in that now, and looking to invest more to help us through the transition,” Nielsen said. “Because there are a lot of discussions that have to take place before the general public is comfortable driving down the freeway at 70 mph next to a truck with a driver you can’t see.”

From a trailer standpoint, Engelage said Great Dane is watching developments on the truck side while working to perfect its telematics solutions that will allow its trailers to integrate with a truck’s automation, with the goal of increasing uptime by more quickly diagnosing and fixing problems.

“Creating a smarter trailer, to connect with an even smarter truck, is the wave of the future,” Engelage said.


Electrification

And though trailers don’t have drivetrains, Engelage said Great Dane also is dabbling in electrification.

“Our focus with electrification is on the refrigeration side,” he said.

“We have a truck-body division that has various all-electric solutions already incorporated, and we’re seeing what we can do to roll that out in terms of a light-weight solution for reefer trailers.”

Governmental agencies, spurred by environmental concerns, are pouring money into electrifying commercial trucks, especially in places like California, and OEMs are feeling the pressure to deliver, so Nielsen said it’s coming, bringing with it many implications for fleets and the supply base.

The greatest constraint is the high cost of batteries, so the biggest OEM winner will be the first company that solves the battery problem, bringing costs down and driving power density up while making the technology more scalable without the incentives currently needed for viable electric vehicles.

Davis said the current trend toward electrification reminds him of the push toward hybrid drivetrains while he was with Eaton in 2007. They encountered similar issues, with incentives quickly driving demand—and then killing it equally as quickly when they went away, leaving no payback.

Another consideration is how industry disruptors like EV manufacturers Thor, Nikola and Tesla, will adapt service networks for the commercial vehicle segment. They’re currently relying on mobile techs, but as their share in the marketplace increases, they’ll need to develop regional networks that can service fleets that run across the country, and decrease downtime from current levels, which Davis said could present an opportunity for the traditional supply base to step in and offer support.


More tech

The panelists also touched on platooning, cameras replacing mirrors and electric brakes.

Neilsen said DTNA recently decided not to pursue platooning after testing revealed they’re unlikely to realize any real fuel savings, as drivers struggle to stick together in imperfect weather and on mixed-use highways, forcing them to slow down and speed up more than they normally would.

Neilsen’s experience also revealed the second driver in a platoon has a dreary duty.

“I’ve been in truck No. 2, driving 45 feet behind the stainless-steel door of a Great Dane trailer, and that’s no fun, staring at that,” he said. “You can’t see where the curve is coming, you don’t know why truck No. 1 slowed down, and you’re scared to death you’re going to run into that trailer door.”

DTNA, instead, is focusing on developing sensors, software and artificial intelligence to power new levels of autonomy.

Nielsen also said Daimler is ready to test the camera systems that can replace mirrors on trucks, like the one Stoneridge received an exemption to install in the aftermarket, but OEMs outside Europe, where the cameras offer more aerodynamic advantages, aren’t currently allowed to install them.

As for electric brakes, Engelage said they’re coming in the next three to five years, as long as the cost to maintain them falls in line. But Nielsen said he’s still hoping fleets continue switching from drum to disc brakes, which boast established, scalable designs with proven benefits in stopping power.


Supply chain support

How will the supply base and service networks help support and maintain all this innovation in technology?

Good question.

Davis said suppliers must focus on parts that enable OEM migration toward automation, which is only one of the most recent developments in the ongoing evolution of trucking. In years past, the supply base helped advance mechanical properties, then material properties, then electronics, and now it’s AI and software, with today’s trucks boasting 400 sensors, 100 million lines of code—and six SIM cards, which Nielsen said is the equivalent of putting six cell phones on every truck.

“What we need from the supply base is changing, and the expertise within the space is changing,” Nielsen said.

The ability to diagnose fault codes is an essential skill in today’s aftermarket.

With all the sensors and other electronics, fixing a problem starts with determining if the issue is software- or hardware-related, Davis said, so the aftermarket must understand the software, and have technicians who can directly or remotely access codes and quickly zero in on the part needing replacing.

Engelage said Great Dane’s goal is to tie its telematics and sensors into the aftermarket network, with GPS tracking helping alert the nearest parts or service location of what’s needed, and have the part automatically ordered or service automatically scheduled to mitigate downtime.

“The idea is to get to the point where we can predict a failure, based on everything we know about every other truck out there in operation today, and then have the guts to pull that truck in on a scheduled stop and make a repair under warranty before that truck has failed,” Nielsen said.

Aftermarket suppliers and independent distributors also can help OEMs by educating dealers, Nielsen said.

“It’s impossible for us, with a small traveling sales and service crew, to take on full responsibility for training technicians and salespeople how to service and promote different options,” he said. “So definitely we need the aftermarket marketing and salespeople to help us, especially as the technology increases.”

The OEMs also need the aftermarket to continue supplying parts.

Their warehouses aren’t large enough or dispersed widely enough to handle every configuration of every part sold over the years, Nielsen said, and even if the number of EVs in service continues to grow, there will be plenty of traditional drivetrains in the market to keep suppliers busy.

And while electric trucks have fewer parts—Nielsen estimated it’s around 7,000, compared to 30,000 in traditional tractors—they may require a higher level of maintenance, necessitating greater capacity and capability in the service network, which is another opportunity for the aftermarket.

Either way, even the most vertically integrated OEMs will continue to need supplier support—now and into the future.

“There’s no reason why the OEMs won’t share that business with you, because it’s your componentry, and they’re going to want you to help them make their vehicle more efficient and reliable,” Davis said.

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