Two separate forecasting reports just out shed positive light on what’s happening with trucking, in terms of the state of freight and rates as well as that of new truck orders.
According to FTR Associates, freight is showing “improved growth, but with fleets managing productivity, there are no serious capacity issues yet and rates continue to move very slowly.”
The research and forecasting firm expects a “significant acceleration” in rates when trucking reacts to the Hours-of-Service (HOS) rule changes that are set to kick in on July 1st. However, it noted that reaction “may take several months to trickle down to shippers.”
“We are standing at the edge of the Hours of Service revision that should initiate tightening in the truck freight sector,” remarked FTR senior consultant Lawrence Gross. “However, at the same time, while the economy is continuing to slowly grow, the manufacturing segment that forms a key component driving truck-freight demand, is faltering. If this continues, it may take out a bit of this year’s anticipated second-half rate sting.”
FTR pointed out that its Shippers Conditions Index (SCI) for April showed a slight improvement from the previous month to a reading of -6.9. The SCI represents a compilation of factors affecting the transport environment for shippers. Any reading below zero indicates a less-than-ideal environment for shippers, according to FTR, and readings below 10 signal conditions for shippers are approaching critical levels—“based on available capacity and expected rates.”
Meanwhile, according to research and forecasting firm ACT Research, in May Class 8 truck orders rose 29% year over year. The order level remained above 20,000 units for an eighth consecutive month— and climbed to its second- highest volume in 17 months.
ACT said new and net Class 8 orders were essentially flat at 24,218 units and 23,188 units, respectively.
The firm noted that, in the same month, Classes 5-7 net truck orders totaled 17,088 units— marking the best order volume in the past eight months.
“New orders being placed for Class 8 vehicles continue to come from soon-to-be buyers who are genuine in their need for new trucks,” said Steve Tam, ACT’s vp-- Commercial Vehicle Sector.
“Cancellations fell meaningfully in May, flirting with a new all-time low,” Tam pointed out. He added that the “lack of speculative orders bodes well for the industry-- as any increase in need for trucks will translate immediately into order activity.”