Preliminary Class 8 orders show sequential gains in May but remain down annually

Coming off of a month that saw Class 8 truck orders at its lowest level in years, preliminary North American Class 8 truck orders in May saw improvement compared to April but still remain at a low level, according to data issued respectively 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 preliminary North American Class 8 orders—at 6,600 units—was up 6.1% compared to May’s 4,000, which marked the lowest level of order activity in the modern era going, back to 1996. FTR said last month that April’s 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, with Class 8 net orders over the last 12 months coming in at 155,000 units.

FTR said that its May data indicates fleets remain reluctant to order trucks, as states extended restrictions due to COVID-19, creating additional economic turmoil, and it added that orders are expected to continue to increase modestly, as economic activity resumes after many of the constraints are lifted. What’s more, it said that freight volumes have picked up some after bottoming out in Mid-April, noting that the recovery is expected to be slow and uneven even though it has not started based on the weak Class 8 orders in May. June should be a better indicator, as more economic activity resumes, the firm explained.
“Most of the country still had some severe restraints in place for part of May,” said Don Ake, FTR vice president commercial vehicles, in a statement. “It is difficult for fleets to plan for future equipment needs under these highly abnormal conditions. Carriers are more worried about what’s happening today, about their manpower needs and short-term issues, than ordering trucks. The concern about the pandemic goes beyond just the business and economic anxieties and greatly diminishes fleet confidence. The economy has entered the restart phase and May was the transition month to get us from shutdown to renewal. Expect Class 8 orders to rise gradually, as caution wanes and fleet buyers begin to focus on the second half of the year and equipment requirements.”

Data from ACT matched up closely with FTR’s, coming in at 6,700 Class 8 net orders in May, for a 56% increase over April and a 38% annual decline, in what it called a “very easy” annual comparison.

“Reflecting the state of the broader economy, there was little to cheer about in May’s industry order activity,” said Kenny Vieth, ACT’s President and Senior Analyst, in a statement. “Considering COVID-related lock downs across the US and North America at the start of the month, and a slow reopening occurring through May in most areas, it was not an exercise building customer confidence. Restarting the manufacturing sector from a full stop was only partly successful, as Mexico’s lock downs remained in effect well after the U.S. began to reopen, resulting in challenging supply-chain dynamics and fragmented supplier sourcing.”