Class 8 tractor orders were still in a lull in April as fleets continue to search for build slots in the 2019 production schedule, according to two freight transportation research firms.
North America Class 8 net order data show the industry booked 14,800 units in April, dropping a moderate 6.2% from March, but down 57% from year-ago April, according to preliminary numbers from ACT Research. Preliminary numbers from FTR put April’s Class 8 orders higher at 16,400 units, which is still a 52% decrease from April 2018.
This is the fourth consecutive month that Class 8 orders are fewer than 20,000, according to FTR, which notes that 2019 is the smallest April total since 2016. Orders have remained consistent for the first four months of the year, according to FTR’s numbers, falling within a narrow 1,000-unit range. FTR puts this April’s numbers up 5% from March.
Class 8 orders for the past 12 months now total 380,000 units, according to FTR. Backlogs remain fluid with orders being rescheduled, often opening up build slots in the near term. FTR expects this type of order pattern continuing until ordering for 2020 begins.
“Near-term build slots are becoming available as fleets rearrange orders based on current needs,” said Don Ake, FTR vice president of commercial vehicles. “There still is limited cancellation activity, as fleets do not want to give up build slots they may need at a later date. They remember what happened last year when they needed trucks, but could not get enough of them.”
ACT analysts also put more blame the current order weakness on the Class 8 backlogs than on “supply-demand balance,” according to Kenny Vieth, ACT’s president and senior analyst. “Of course, contracting freight volumes, falling freight rates, and strong Class 8 capacity additions suggest that the supply-demand balance will become an issue later this year.
Economic growth is expected to moderate soon, slowing down the freight markets, Ake noted this month. “However, currently there is still a need to replace older trucks and also get more new trucks on the road,” he said. “Fleets have their expected requirements orders in for the year and are working with the OEMs to schedule production and deliveries as needed. Some washout of the backlog due to increased cancellations is still expected to occur later this year.”
Regarding the medium-duty market, ACT’s Vieth said: “While the U.S. manufacturing/freight economy has been droopy since late 2018, the medium-duty market continues to benefit from underlying strength in the consumer economy. In April, NA Classes 5-7 net orders were 23,100 units, down just 6.8% year-over-year and up 12% from March.”