Oil, Gas Companies Aim to Curb Truck Order Backlog

Oil, Gas Companies Aim to Curb Truck Order Backlog
Truck procurement has been the foremost challenge for private fleets, for-hire carriers and organizations that rely on trucking across many industries, including gas, construction, oil and energy.

Truck procurement has been the foremost challenge for private fleets, for-hire carriers and organizations that rely on trucking across many industries, including gas, construction, oil and energy. This challenge has been emphasized by the backlog of orders for Class-8 heavy-duty trucks, largely stemming from an American economy that has been healthy and resilient ever since the Great Recession ended in 2010, and a dilapidated industry philosophy toward truck procurement which is now changing.

Class-8 truck orders and sales continued at a wholesome pace through most of 2018, as many companies saw the need to upgrade into newer equipment or add to their equipment to handle the boosted demand in shipping goods via the nation's economic activity. According to ACT Research, Class-8 net orders calculated 506,300 units at the end of November, the second-strongest 12-month order period in history, following only the 12-month period ending October.

Monthly orders (28,082) still overtake the number of units being manufactured (27,973) as of November, and while this fissure is narrowing, it continues to show high demand for new trucks.

Specifically for energy, oil and gas brands, these organizations will continue to feel the consequences of an order backlog this year as long as they continue their asset acquisition strategy based on functional obsolescence as opposed to economic obsolescence. Firms that shorten their asset management lifecycles based on a flexible lease model will be able to plan their substitutions better and thus avoid the agony associated with the current backlog.

The heated economy means that more businesses are shipping materials to job sites or commodities across the country; more businesses need to re-stock shelves and inventory; more consumers need goods ordered online and the transport of those shipments; as a result, trucks are working strenuously.

Trucks and transportation have been the livelihood of this economic engine.

Replacement and truck procurement strategies that help the economy stay lively need to be carefully contemplated, especially as we begin 2019 when companies take a closer look at their bottom line.

The long-standing business objective was for organizations to make purchase orders of trucks en masse, while driving them for anywhere between five to upwards of 10 years or more of service, as a way to squeeze every cent out of the truck’s usage. However, data and analytics are proving this model to be costly and unproductive. Instead, private fleets and for-hire carriers are grasping that they can achieve more savings on the truck’s overall impact to the bottom line, as well as maintenance and repair (M&R) – the highest variable and volatile cost of a fleet operation by moving to a shorter lifecycle.


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