August preliminary Class 8 truck orders saw some gains, according to data issued this week by freight transportation consultancy FTR and ACT Research, a provider of data and analysis for trucks and other commercial vehicles.
FTR reported that August preliminary North American Class 8 orders—at 20,500 units—came in 3% higher than July and were up 90% annually, with total units, for the last 12 months, at 177,000.
The firm said that these numbers show how large fleets are buying new trucks based on their investment cycles, coupled with some orders being allocated for fleet expansion efforts. Looking ahead, FTR said it expects orders to stay in the 20,000 range over the next few months, due to an increase in buyer confidence paced by increasing freight volumes and economic recovery, adding that there appears to be less uncertainty regarding the pandemic, with businesses and consumers adapting to the current environment.
“This is another positive sign for Class 8 trucks – the second consecutive 20,000-unit month and proves that the July total was not a fluke, with a possible trend developing,” said Don Ake, FTR Vice President Commercial Vehicles, in a statement. “Fleets are more confident, but it still is mostly larger fleets purchasing replacement trucks. Medium-sized and smaller fleets remain cautious about ordering trucks. This is an odd situation in that it is a highly uncertain, yet very stable, environment. You have a pandemic, a presidential campaign, and social unrest all occurring at the same time. However, the economy is briskly recovering and generating ample freight. Fleets are ordering only what they need, and thus, orders are aligning very close to production rates.
Ake also noted that it is reasonable to expect orders to track in the current range until those risk factors are resolved, with the market in a holding pattern and potentially remaining there through the rest of the year.
ACT Research reported that August preliminary North American Class 8 orders—at 19,500 units—were off 4% compared to July and up 75% annually, in what it called an “easy” comparison.
“Considerable parked Class 8 tractor capacity, generous unemployment benefits, and consumers spending more on goods and less on experiences has created a perfect storm for carrier profits over the past several months,” said ACT President and Senior Analyst Kenny Vieth in a statement. “That convergence of positive factors pushed spot freight rates to record highs in August, and the rally in rates is reflected in the sustained rebound in new medium- and heavy-duty commercial vehicle demand.”
In assessing ACT’s August numbers, Ravi Shanker, Morgan Stanley transportation analyst, wrote in a research note that August marked the fifth month that Class 8 orders came in around the 20,000 level, going back to December 2019, which is in line with expected replacement levels while also noting that the moderate underperformance compared to seasonality indicates signs of recent order momentum slowing.
These numbers from both firms, over the last two months, are needed and welcome, especially when taking into account that in April Class 8 truck orders fell to its lowest levels in years. May saw some gains, but orders remained at a low level.
FTR previously said that April’s low tally was a byproduct of fleets delaying ordering trucks until the economic uncertainty over the COVID-19 crisis abates. And it added that fleets also canceled a significant number of orders, which were scheduled for near-term deliveries. It also noted that May’s orders fell 37% annually.
What’s more, it added that, at that time in May, the numbers indicated fleets remained reluctant to order trucks, as states extended restrictions due to COVID-19, creating additional economic turmoil, and it added that orders were subsequently expected to continue to increase modestly, as economic activity resumed after many of the constraints were lifted.