According to ACT Research, preliminary North American Class 8 net orders in January were 42,200 units, down 17% from December. That’s still a 146% improvement over January 2020.
In the medium-duty market, Class 5-7 orders were at 25,300 units last month, sliding 28% sequentially, but were still up 26% compared to last January. ACT Research will have final January numbers in mid-February.
“At this introductory pass at 2021 commercial vehicle data, the consumer economy lacks the stimulus-fueled robustness that characterized spending into early Q4,” said Kenny Vieth, ACT’s president and senior analyst.
“Even as consumers look less hearty – at least in the short-term –manufacturing sector indicators show that the industrial economy is shaking off the dust of two years of tepid activity,” he continued. “The slower economic expansion of the past two months is reflected in spot freight rates, which have trended lower since November. Some, but not all, of the pullback relates to seasonality, which was also reflected in January’s preliminary commercial vehicle net order data.”
Orders could increase soon, though.
Former President Donald Trump signed off on a $900 billion coronavirus stimulus bill in late December. Recently inaugurated President Joe Biden is pushing for another round of coronavirus stimulus payments under the proposed $1.9 trillion American Rescue Plan.
If passed, the influx of cash will likely to create a surge in spending, and thus, increased freight rates due to demand. That increases capacity and the need for more new truck orders. In May 2020, when the first stimulus bill was passed, spot rates were at $1.60 for dry van, according to DAT Solutions. These jumped to $1.81 in June and $2.37 by September.
New Class 8 orders reflected the capacity crunch. In May, FTR logged 6,700 new Class 8 orders, which jumped to 15,600 in June, for a 132% increase. By September, orders rose to 32,0000.
Because of the growth of e-commerce and food and beverage sectors as COVID-19 shutdowns persist, the medium-duty market is also poised to benefit.
“Despite January’s preliminary net order moderation, the pandemic-driven shift in consumer spending from experiences to goods remains a benefit for the providers of local trucking services, and the symbiotic relationship between heavy-duty freight rates and medium-duty demand continues to impact this market segment,” Vieth said.
