Dive Brief:
- A cancelation rate of trailer orders jumped from an already elevated rate of 1.7% in December to 3.2% in January, according to ACT Research.
- Several markets were drivers in the increase, such as dry vans, according to Jennifer McNealy, ACT Research director of commercial vehicle market research and publications.
- “Clearly, with markets swimming in capacity, no one needs a higher trailer-to-tractor ratio,” she said in a report summary.
Dive Insight:
Cancelations in recent years have been for the most part restrained, but ACT Research noted an 18-month freight recession is impacting firms and their available capital.
Trucking companies are lowering capital expenditure plans in 2024, with carriers such as Old Dominion Freight Line lowering its tractor and trailer spending to $325 million, down from $400 million in 2023.
Schneider National also lowered its overall CapEx to range between $400 million and $450 million this year, down from $574 million in 2023.
“Our CapEx guidance range of $400 million to $450 million is down fairly considerably from a year ago because of the catch-up with the OEMs and the age of fleet,” President and CEO Mark Rourke said on a Feb. 1 earnings call.
For J.B. Hunt Transport Services, its overall CapEx is slated to span from $800 million to $1 billion, down from $1.6 billion in 2023.
CFO John Kuhlow said on an earnings call last year that the carrier planned investments across intermodal and real estate operations but also needed “elevated levels of replacement demand as a result of equipment challenges” experienced during the COVID-19 pandemic.
Starting off 2024, J.B. Hunt executives have “cleaned out our older equipment and feel our fleet is refreshed” and in a good position, COO and Contract Services President Nick Hobbs said on an earnings call last month.
In other trailer order cancelations last month, tank categories also had high rates, with liquid at 3.7% and bulk at 10.2%, ACT Research reported, noting the dominant reason could be weaker oil prices.
