Mack: It's a good time to be in trucking
Date: Monday, March 12, 2018
Source: Fleet Owner
Even before the end of the first quarter, market conditions and fleet purchasing activity are coming together so well in 2018 that "it's a good time to be in the trucking industry," Mack Trucks VP of Marketing John Walsh summed things up at the Work Truck Show in Indianapolis.
Mack has revised its outlook upward again for the North American Class 8 market and is now expecting "in the neighborhood of 280,000 trucks" will be sold, Walsh said. "Good news in the economy is generally good news for trucking, and there's a lot of good news in the U.S. economy today," he added.
Some factors behind the even rosier prediction than the OEM made earlier this yearinclude high levels of employment, consumer spending and business investment. The recently enacted tax reform legislation has also been a boon. Globally, Walsh noted, there are also some positive economic signs; generally, optimism in the business and economic world tends to breed more of the same.
In a telltale sign of higher consumer spending, inventory-to-sales ratio is at a three-year low, Walsh said. "That means product's not sitting on the shelves — consumers basically are buying the products as soon as they hit the shelves," he noted. "And that means they've got to restock the shelves, and they need trucks to get the products there."
Growth in the U.S. gross domestic product for the year is now estimated at 2.8%, up from 2.2% last year. But one of the most encouraging and direct indicators for the Class 8 market Mack has observed is fleets lining up to buy new tractors.
"Order intake has been really strong now for several months," Walsh said. "January and February were two of the largest order intake months ever in the history of the Class 8 truck market — so, really robust order activity."
A positive freight environment, tight capacity in trucking and rising freight rates are helping to boost profitability for fleets and trucking companies in a market demanding more transport, Walsh explained, "and it's all good news for us who sell Class 8 trucks." In the construction segment of the Class 8 market, where Mack commands a dominant share of truck sales, there are plenty of signs of momentum.
"Construction spending last year reached an all-time high of $1.25 trillion, and contractors added 210,000 jobs, a 35% increase over 2016," said Walsh. Again, with employment levels strong and mortgage rates low, housing starts are up; pricing on housing was up 7% last year and is expected to grow another 6% in 2018.
Still, there are some potential constraints in housing and construction. A tight labor market and rising materials costs — not to mention increased suggestion of trade wars between the U.S. and countries that have been supplying those materials — could put a cap on the expected growth to an extent.
"We're keeping an eye on what I'll call a potential dampening effect in this part of the economy due to the labor shortage — you know, carpenters, electricians, plumbers, they're all very busy right now — as well as the rising cost of materials used in construction like lumber," Walsh said. "But all in all, we're expecting the Class 8 market in construction to be very strong this year."
In the on-highway side of the Class 8 market, Mack is also hoping to make strides with its new Anthem tractor launched last September. The OEM is looking to produce and deliver the Anthem "in bulk" in 2018, and so far, customer response to the new product "has been off the charts," Walsh contended.
Mack and its dealer network have made significant investments in the last several years to position the brand for growth. Since 2010, Walsh noted, Mack dealers have invested more than $600 million in facilities and staff, the result being 53% more service bays and over four times as many Mack Master Technicians as before.
The focus has been on reducing time customers' trucks spend in the shop, which Mack estimates can cost some $2,000 a day per truck, not accounting for the potential to lose customers due to trucks out of service. The company's fleet management/ data analytics program isn't just capturing fault codes off of trucks to support more predictive maintenance, noted Roy Horton, director of product strategy for Mack Trucks.
That includes GuardDog Connect vehicle monitoring, OneCall service, new Mack Over-the-Air Updates, Certified Uptime Centers and more. "We've got live people who interact with our customers," Horton said. "It's a real person behind the scenes who's talking with them and helping them to manage the situation that they're in to the best outcome possible."
Mack has worked with its dealers to streamline repairs at Mack Certified Uptime Centers, Walsh said. "As part of the Certified Uptime process, we've established what we call 'dedicated uptime bays' for shorter repairs — repairs that take less than four hours — so they don't get stuck behind the longer repairs.
"As a result of that improved workflow process, we've been able to reduce overall repair times by 21%," he continued. "You can do the math on $2,000 a day and a 21% reduction; this is significant."
So in 2018, not only are things looking good for the trucking industry, "it's a good time to be partnered with Mack," Walsh quipped.
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