ACT and FTR report April Class 8 orders are down but still healthy overall

Data published by ACT Research, a provider of data and analysis for trucks and other commercial vehicles, and freight transportation forecasting firm and consultancy FTR Associates indicated that preliminary data for Class 8 trucks in May is down from a very strong April.

ACT reported that preliminary net orders in May for heavy-duty Class 8 vehicles in North American markets hit 24,400 units, marking the seventh straight month orders have been above the 24,000 mark and a “clear sign” of increased demand.

ACT said a final order tally for May would come in later this month. The firm added that preliminary net order numbers are subject to revision and are typically accurate to within 5 percent plus or minus.

“Freight hauling capacity is still tight and not showing any signs of letting up,” said Steve Tam, ACT vice president-commercial sector, in an interview. “From a shipper’s perspective, that means carriers are going to keep coming back to them for rate increases and some assurance that business is going to keep going. They could be looking for more favorable fuel surcharges, depending on what happens with fuel prices. Unfortunately, shippers are getting the short end of the stick this time around, whereas things are going pretty well for carriers. They have the pricing power and the ball is in their court at this point.

Tam added that carriers also finally have the wherewithal to replace some aging equipment that requires more care and maintenance, which comes with an attached price tag.

This means, that it does not always make great economic sense to keep running older equipment, expediting the need for newer equipment, which Tam said is what many carriers are doing.

“More carriers are showing healthy balance sheets, which the banks are signing off on so carriers can get deals done to buy trucks,” said Tam.

According to ACT data, orders were booked in excess of a 365,000 unit annualized rate from March to May. The firm said that industry backlogs—at slightly more than 125,000 units at the end of April were likely up as May orders were ahead of OEM planned production in May.

FTR’s preliminary May data was in line with ACT’s, coming in at 24,063, which was down 37 percent from April’s record-high of 37,922 but up 85 percent annually. And orders over the last six months come in at 337,600 on an annualized level, which FTR said is well ahead of last year’s rate for the same timeframe.

“The numbers in recent months have been very good even with the decline in May,” said FTR President Eric Starks in an interview. “Things are going to be choppy at times, with some seasonality involved and orders getting prepared for delivery for the shipping season. The orders coming in now are for the fourth quarter, which is not typically a desired spot to be putting trucks into service, as it is close to the first quarter slowdown.”

For truck order numbers to hold up as well as they have is impressive, said Starks, coupled with such a strong April, which when paired with May numbers, are very strong.

These numbers, said Starks, continue to suggest that capacity is tight, specifically in the truckload long-haul market, with carriers actively looking to replace equipment at a decent rate.