Kellogg Child Welfare Foundation and spent decades funding educational and health-related programs and facilities to benefit disadvantaged children in poor and rural areas. Founded by Will Keith Kellogg in 1930, the Battle Creek, Michigan foundation was originally called the W.K. Kellogg Foundation is the seventh largest private foundation in the United States, and the largest nonprofit in Michigan. To order a copy, contact Chris Brady of CMVC at or 51.The W.K. CMVC estimates the probability of a downturn in freight volumes at 30%, which is relatively high given the economy is recovering from a deep recession.Ĭommercial Motor Vehicle Consulting publishes the monthly newsletter “Visibility of the Supply Chain” for general freight carriers.
The risk to fleet capacity utilization is a downturn in freight volumes, which would reduce profitability through the reduction of truck utilization and increased price competition. In conclusion, increasing truck sales will not dampen truck utilization in for-hire trucking in the short term. Lower freight volumes would result and lower truck utilization would increase price competition, squeezing profit margins. Consumption is the largest influence on freight growth rates, so the freight environment remains fragile as household balance sheets remain relatively weak due to slowing personal income growth.Ī decrease in consumer spending would cause inventories to become excessive within the supply chain resulting in a severe inventory correction. Over the past two months, nonfarm employment growth has decelerated substantially, implying a slowing of personal income growth as well. The economy is expanding at sluggish growth rates, which makes it susceptible to moderate shocks. Combined with high fleet capacity utilization, an improving pricing environment implies profitability will remain good in for-hire trucking.Īt this moment, the risk to high truck utilization in for-hire trucking is not increasing truck sales but rather the freight environment. The pricing pendulum, therefore, should continue to slowly shift in favor of carriers. Stable capacity combined with sluggish to moderate freight growth implies a continued upward trend in capacity utilization in for-hire trucking, just at a slower rate. Profitability in for-hire trucking has recovered due to higher truck utilization ( Chart A) combined with the lower levels of capacity, and a recovery in freight volumes from recession lows.īecause strong Class 8 truck orders are largely related to upgrading aging fleets ( Chart B), this implies capacity in for-hire trucking will remain relatively stable in spite of stronger truck sales during the second half of the year. The deterioration of carriers' balance sheets during the recession caused many to extend truck trade cycles. Will capacity in for-hire trucking expand at faster growth rates than freight volumes, thereby reducing fleet capacity utilization that would put downward pressure on freight rates? Commercial Motor Vehicle Consulting's model implies the increase in new-truck sales is related to upgrades of aging fleets, so capacity through the second half of 2011 will remain relatively stable. An increase in truck output during the second half of 2011 implies higher truck sales, while freight volumes are predicted to continue to expand at sluggish to moderate rates. Will this result in excess capacity in the for-hire trucking industry, and therefore lower profits?Ĭlass 8 truck makers are increasing output in response to strong truck orders over the past several months, resulting in a backlog of unfilled truck orders exceeding 100,000 trucks. Although freight volumes continue to expand at sluggish to moderate growth rates depending upon the commodity, Class 8 truck orders have been strong over the past several months.
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