The Sale of Big Rigs Shifts into Overdrive: Are Trump’s Tax Cuts Working?

On the highway, big rigs—or semis—are something most people eye warily and often try to get around quickly. Kids, however, love them and try to get the driver to honk their horn. Retailers also love them. After all, those big rigs are the lifeblood of our economy. Recent data shows that sales for new rigs is up. You might be wondering, does this mean Trump’s tax cuts are working? 

To get an idea of how big of an impact these rigs make on consumers, retailers, and manufacturers, consider the data: 3.2 million long-haul drivers used 2.8 million semis and drove 175 billion miles in the U.S. in 2016, according to Phil Berg, writing for Popular Mechanics. He added, “Recent estimates suggest 68 percent of all goods in the U.S. are delivered by semitruck, which works out to about 60,000 pounds per American every year. The two largest commodities by weight are agricultural and building materials.”

As those in logistics know, the use of big rigs would not be efficient without the use of pallets. Pallets have been in use since the beginning of the 20th century and allow manufacturers and retailers to safely load product on and off of trucks quickly and efficiently. Over time, pallet manufacturers improved them for strength and quality, and are now using plastic as a renewable resource that benefits every industry and is easy to clean and sanitize.

The Impact of Trump Tax Cuts

In 2017, Americans for Tax Reform president Grover Norquist said President Trump’s tax reform would be a huge benefit to small businesses and pass-through companies, explaining that those types of businesses would see a 42% tax rate cut.

Derek Leathers, president and CEO of Werner Enterprises, Inc. (an American freight carrier and transportation and logistics company) spoke during an event held at the White House Rose Garden in April. He shared how the tax cuts have impacted his company.

According to Trucking Info’s Jack Roberts, Leathers told attendees, “Recent changes to the tax code have allowed the Omaha, Nebraska-based Werner to invest more than $127 million in new, clean and environmentally friendly trucks and trailers. Additionally, Leathers noted, Werner has been able to invest in its driver corps in the form of pay raises and bonuses, which he said have averaged out to $2,400 per driver since December.”

The American Trucking Association (ATA) said Trump’s tax cuts have been good for their members. “A January 2018 survey of ATA member companies revealed that 50% of carriers were planning to increase wages or offer bonuses as a result of tax reform, and 47% were planning to invest their tax cuts in new equipment, including trucks, trailers and safety technology,” reported Trucking Info.

“ATA championed for these tax cuts because, as truckers, we knew full well how they would boost not only our industry but the larger economy too,” said TCW president Dave Manning, while at the same event with Roberts. “We’re only a few months into them becoming law, yet we can already see their effects in our operations and a growing economy.”

Analysis of Truck Orders

Big Rig truck orders hit historical highs in 2018.  ATC research forecasts 335,000 truck orders for 2019, 243,000 for 2020 and retail sales of 259,000 for 2019. The drop-off in orders comes as there are also declines in freight orders and rates.

Wolfstreet.com also paints a doom and gloom picture, saying that orders for Class 8 trucks are down by 70 percent compared to last year’s numbers, but also reported sales of Class 8 trucks in June reached 48,168, the highest since 2006. They explain the sales figures are for trucks ordered in 2018, but built and delivered this year due to a backlog in building the trucks.

Is it all bad news? Not necessarily. Brian Straight, writing for Freight Waves, reminds that it depends on what data you look at. He points to Navistar’s Steve Gilligan, vice president of product marketing, who said, “The 2019 outlook for trucks remains strong as tonnage (3.6 percent year-over-year in February) and loads per truck (6.7 percent year-to-date, year-over-year) remain above the long-run trend, and the job market remains tight.” 

Navistar is forecasting industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada to be 425,000 to 445,000 units, with Class 8 retail deliveries of 290,000 to 310,000 units.

Troy Clarke, Navistar chairman, president and chief executive officer said, “Our marketplace progress, which has delivered our strongest backlog this decade, provides confidence that both 2019 and 2020 will be good years for Navistar.”

Trucking Info offered a moderate view in early August, stating, “Despite conditions that indicate overcapacity and low truck orders, new truck production is still at all-time highs as manufacturers work through the sizable backlog of orders from last year’s boom. As a result, capacity additions are expected to continue through the end of 2019 and ACT estimates that the active tractor fleet will grow by 2.5% in the second half of the year. A freight recovery is possible in 2020; however, uncertainty surrounding the trade dispute between the U.S. and China could affect the outcome.”

Give Plastic Pallets a Try

When looking at pallet purchases for your new big rigs, Plastic Pallet Pros is the company to contact. Whether you are looking for economical pallets, nestable pallets, rackable pallets, stackable pallets, or export pallets, we can supply all your needs. We can also build custom pallets to your specifications.

Our dynamic sales team is dedicated to providing the highest level of service to our customers and vendors. This team is focused on developing excellent solutions for our customers seeking the right product to meet their specific needs.

Give us a call today to discuss your needs in detail. Once you experience what plastic pallets can do for your business, and how much money you will save over the ten-year life cycle, you will wonder why you waited so long.