Net orders for heavy-duty Class 8 commercial vehicles reached the highest level of the year in June, jumping 93% over June 2009, according to data tracked by ACT Research Co. (ACT). ACT said Class 8 net orders reached 15,999 in June this year, an increase of 21% over May. On a year-to-date basis, net orders for Class 8 vehicles are up by 50%, the firm noted.
Meanwhile, net orders of medium-duty Class 5-7 equipment increased 74% this June vs. the same month in 2009, with Class 5-7 net orders up by 26% on a year-to-date basis when comparing 2010 and 2009 figures.
“We continue to see incremental freight being added to the trucking market and that’s helping increase the order rate,” Steve Tam, ACT vp, told FleetOwner. “But make no mistake; this is a recovery taking baby steps. We’re increasing orders little by little as part of a long, slow slog to get back above normal [truck] replacement levels.”
Tam pointed out that the outlook for truck orders – and freight volumes – is being buoyed in large part by positive second-quarter earnings reports from carriers.
Iowa-based Heartland Express, for instance, said its operating revenues in the second quarter increased 8.9% to $127.4 million compared to the same quarter in 2009, though net income slipped 5.5% down to $16.7 million. That drop was largely due to a decrease in gains on disposal of property and equipment plus increased depreciation expenses when it purchased new tractors last year.
“Our increase in operating revenues resulted from the tightening of available industry capacity,” the carrier noted. “Freight demand continues to lag dramatically behind that experienced in 2007 prior to the recent recession; however, freight rates have stabilized and equipment utilization has improved in comparison to last year.”
“Early second-quarter reports from publicly traded truckload carriers confirm the improving freight transportation environment, as revenues and profits are up significantly from 2009,” ACT’s Tam noted. “Overall orders are still below normal replacement levels, but momentum is building as trucker profitability improves.”
Suppliers to the trucking market are seeing trends that mirror ACT’s outlook. Eaton Corp., for one, said truck segment sales reached $492 million in the second quarter this year, up 53% compared to 2009, with operating profits in this division climbing to $59 million for the quarter.
Overall, Eaton said its total sales in the second quarter this year reached $3.38 billion, 16% above the same period in 2009, with net income climbing to $226 million compared to $29 million in 2009.
“Demand in the NAFTA region for Class 8 trucks is beginning to improve, as freight growth and the aging truck fleet are finally starting to generate an increase in truck orders,” said Alexander Cutler, Eaton chairman & CEO, in the company’s second-quarter earnings report.
“Truck production in the second quarter was up 28%, with U.S. markets up 32% and non-U.S. markets up 24%,” Cutler added. “For all of 2010, we now anticipate our truck markets will increase by 23%, stronger than our earlier expectations. We also expect truck production in the second half [of 2010] to increase compared to the first half of the year.”