Class 8 net orders show gains in July

July preliminary Class 8 truck orders saw significant gains, for a few different reasons, according to data recently issued by freight transportation consultancy FTR and ACT Research, a provider of data and analysis for trucks and other commercial vehicles.

FTR reported that preliminary North American Class 8 orders—at 20,000 units—was up 28% compared to June’s 14,400, and doubled its output compared to July 2019. And over the last 12 months, FTR said Class 8 orders came in at 168,000 units.

The firm explained that the improvements in the trucking market over June and July served as a driver for new truck orders, with new truck demand exceeding expectations, with the caveat that the combination of COVID-19 case counts on the rise and Congressional action on unemployment benefits potentially serving as a hindrance heading into the fall.

“As we hit the height of summer demand, the freight markets showed strength and resilience and that led to additional orders for trucks,” said Jonathan Starks, FTR chief intelligence officer, in a statement. “The order activity for both June and July was more robust than expected and is good news for the equipment producers. However, despite the increasing orders, FTR still expects the Class 8 market to maintain a slow, steady recovery. The freight markets sustained a traumatic decline of volumes at the start of the pandemic and consumer demand, on an absolute basis, will remain weaker as we deal with high levels of unemployment and a Congress that has been unable to foster a bi-partisan solution to stimulate demand. The OEMs received a needed boost from July orders, activity that will help keep the industry moving in an upward direction.”

And ACT Research reported that preliminary July North American Class 8 net orders—at 20,300 units—were up 27% compared to June and up 98% annually, against what it called “a very easy year-ago comparison.”

ACT said these figures mark a six-month high

“Less than a week ago, we learned that the US economy was 9.5% smaller in Q2 than it was in Q1 and 10.6% below its end of 2019 level,” said ACT President and Senior Analyst Kenny Vieth, in a statement. “Additionally, when the COVID began to bite in late February, there was a strong case to be made that the trucking industry was suffering from lingering overcapacity that was still putting downward pressure on freight rates, and by extension, carrier profitability. The context of rising rates and improving carrier profits adds perspective to what is now occurring in Class 8 orders: Supply matters. With many drivers (and trucks) sidelined, there is now insufficient available capacity for rebounding freight volumes. There is a strong relationship historically between carrier profits and equipment demand.”

These numbers from both firms 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.