Chris Stadler, product marketing manager for regional haul at Volvo Trucks North America (VTNA) will tell you that the reason the OEM embarked on an over two-year effort to develop a new regional truck platform – the VNR family, which replaces its old VNM model – centers around the recognition that freight distribution patterns are changing.
“We needed a more adaptable truck: one that can operate in the city as well as on the highway,” he explained to American Trucker during a ride and drive event hosted by the OEM last week in Winston-Salem, NC.
Stadler noted that while the regional market is changing, the OEM can’t bank on any one segment doing better than another.
“There are lots of good opportunities in the regional market: bulk haul, tanker, city delivers, P&D [pickup and delivery], flatbed, construction, and LTL,” he emphasized. “But there are also lots of changes, too. We had anticipated more regional versus long haul when the expanded Panama Canal opened. Also the oil and natural gas fields are only slowly recovering.”
Those are some of the reasons why demand for regional trucks slumped in recent years. For example, according to VTNA data, in 2014 the regional haul market accounted for 66,300 units, humping to 72,320 units in 2015.
But in 2016, demand dropped to 54,029 units. Comparing year-to-date regional market sales through March 2016 to year-to-date sales through March 2017, the decline is steeper: 15,519 units against 11,762 units, respectively.
Still, Magnus Koeck, VTNA’s vice president of marketing and brand management, stressed that 54,000-plus units remains “a big market.”
And demand for regional truck specs may grow if the trends shifting freight patterns continue to gain steam.
John Larkin – managing director and head of transportation capital markets research for Stifel Capital Markets – recently noted that the “modal mix” for delivering freight may be undergoing some major changes – shifts being brought about in no small part by the rapid growth of e-commerce, changes to how goods are packaged for transport, and supply chain reorganization efforts.
“With distribution and fulfillment centers ever closer to the end markets, with the continued miniaturization of products and packaging, and with manufacturing moving closer to local distribution and fulfillment centers, the truckload (TL) sector seems to be losing a little market share,” he said.
As a result, intermodal, less-than-truckload (LTL), and private and/or dedicated fleets seem to be generally picking up some market share; at least from where Larkin sits.
Perhaps the biggest change in the regional sector, though, is how truck OEMs are now getting more focused on driver recruitment and retention issues, said Stadler, as less and less people want to get into trucking.
“They don’t want to be gone weeks at a time anymore and that’s why LTL fleets, for example, are creating more hubs and distribution points: that leads to more short hauls,” he noted. “We’ve also heard there is more demand for timed deliveries, too. So we want to put the right truck into the right application and not just for today but for five to 15 years down the road.”
That means adding more electronics and “gadgets,” from Stadler’s viewpoint, that give the “younger generation” vehicle operating parameters that appeal to them, while keeping it “intuitive” for the current generation of truck drivers.
“It’s about making it easier for all generations [of truck drivers] to adapt to using it,” he stressed. “We want to make sure it can be operated by those who’ve never seen a manual transmission in their life. Make it adaptable.”
It also must be a more cost-effective truck as well, Stadler stressed. For example, he said the VNR’s improved aerodynamic profile can boost fuel economy 1% compared to the previous VNM model, while the VNR’s Volvo GHG2017 powertrain can offer a further 2.5% to 3.5% gain in fuel efficiency versus the VNM.
“Regional can longer be a hand-me-down from long haul; it must offer better performance and fuel efficiency, too,” Stadler pointed out. “While regional [fleets] don’t usually think about fuel economy, fuel is still their biggest cost. So getting an extra one to two miles per gallon when they are operating on the highway is an additional savings in the wallet for them.”
Regional customers also keep truck a long time, he added: five to 15 years for some of them. “They’ll start it in bulk hauling, then move to flatbed and then finally to dry van. They use the truck to its full potential,” he explained. “My mission is to give the customer a truck that can do all of those jobs.”