Addressing uncertainty
Moran Transportation has a lot of equipment in operation. The Elk Grove Village, Illinois, carrier provides regional less than truckload and regional less than container load service from seven facilities in Illinois, Indiana, Wisconsin, Missouri, and Minnesota.
“For the past couple of years, we have been incredibly concerned about the upcoming challenge of new engine requirements for 2027,” Mike Moran, president, said. “The technologies that were implemented in 2008 and 2010 are still posing big issues from an operational standpoint and now we’re heading into unchartered waters with another level of complexity that has not been proven. For anyone that owns or operates trucks, this hurdle is going to be far greater.”
Concerned about supply chain issues and prolonged delays for new trucks, Moran took the initiative and placed orders for new equipment in late 2022 and early 2023.
“We actually added or replaced 25% more equipment than we normally would have to try to avoid having to acquire anything new in 2027,” he related.
“The added costs and uncertainty surrounding the new emissions technology are going to continue to push freight rates up and cause products to be much more costly,” Moran added. “In some cases, that will also cause some small and midsized carriers to exit the market if they can’t afford this new technology.”
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Having a strategy and a plan
Penske Transportation Solutions, the umbrella company that encompasses Penske Truck Leasing, Penske Truck Rental, and Penske Logistics, operates more than 442,000 trucks. According to Paul Rosa, SVP of procurement and fleet planning at Penske Truck Leasing, the company has yearly replacement needs. “Regardless of what the freight market is doing, every year each of our product lines requires a strategy and a plan,” he said.
“Our 2024 calendar year plan was completed last year, and we are now finalizing the plan for 2025 and beyond,” Rosa explained. “We will continue to support our growing logistics business with new equipment as needed, and the rental fleet gets an annual refresh as we continue to focus on fielding as much new equipment as possible. Like our logistics fleet, our lease fleet will also have significant replacement and considerable growth needs.”
Additionally, Rosa stated that the industry will soon respond to what lies ahead in 2027 once OEMs share more information or more details on costs become available.
“We expect prebuy activity to start later in this year as 2024 production fills,” he said. “Once 2025 production for the 2026 model year opens, there will be a huge spike in orders.”
“Many fleets remember what happened from 2021 to 2023 with OEMs selling out quickly,” Rosa added. “They will not want to fall behind and miss out on ordering equipment, so we are very aware of this and have a plan. We will operate using normal cycles, but we will be ready to take action and respond aggressively.”
Uptick in planning
Generally, operators do not prioritize regulatory changes when replacing or expanding their fleets, according to Chuck Davis, director of sales at PacLease. Instead, he believes their focus is finding the most cost-effective and reliable trucks to minimize downtime.
“However, as we approach the implementation of the 2027 emissions regulations, we’re observing a discernible uptick in procurement planning among customers,” Davis said. “Fleets are strategically evaluating their vehicle acquisition timelines, with many considering a prebuy approach to secure trucks that comply with current regulations. This trend is not only driven by the desire to get ahead of more stringent emissions standards but also reflects an understanding of the potential cost implications associated with the forthcoming regulations.”
“Additionally, given the cyclical nature of the freight market, we see customers aligning their vehicle replacement strategies with projected market demands,” he continued. “With the aim of maximizing operational efficiency and competitiveness, fleets are increasingly prioritizing the integration of newer, more reliable, and fuel-efficient models into their operations. This replacement trend is indicative of a proactive stance toward both maintaining compliance with environmental standards and ensuring readiness to meet the evolving needs of the freight industry.”
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