A sharp climb in net orders for heavy-duty Class 8 commercial vehicles in May reflects growing confidence among truck fleet owners that the U.S. economy is firmly on the rebound, spurring steady increases in both freight demand and rates.
ACT Research Co. (ACT) reported 13,231 net orders of Class 8 vehicles this past May – an increase of 84% compared to the same month in 2009. More importantly, over half of the orders are scheduled for delivery in the third quarter, indicating truck fleets are looking to get new units on the road before the peak fall shipping season, said Kenny Vieth, a partner & senior analyst with ACT.
“One of the key takeaways from these numbers is the significant forward component of these new truck orders,” he told FleetOwner. “Placing over half of them in the third quarter is an atypical distribution pattern, and it says to me that there’s more confidence in the economy, that the recovery is looking good, and that trucking companies will need capacity in the near term.”
Several freight demand metrics are bolstering that outlook. For example, according to TransCore’s North American Freight Index, freight availability on the spot market increased by 216% in May compared to the same month in 2009. That marks the strongest volume for the month of May in at least 10 years, said TransCore.
Spot market freight availability has been higher than normal since January, TransCore added, with freight availability increasing in May for dry and reefer vans in advance of the peak summer season. However, spot freight for flatbeds fell by 15% compared to April’s extremely high level, the firm noted.
And longer-term economic trends are developing that could foster more freight demand as well. The Commerce Department’s U.S. Census Bureau said that while retail sales for May declined 1.2%, they’ve grown 6.4% overall in the second quarter, following an increase of 8.2% in the first quarter.
“With strong freight growth continuing to absorb excess capacity, trucker profits should soon follow,” added ACT’s Vieth. “While there are still hurdles to clear, including used equipment prices and credit availability, the pendulum is swinging in favor of new truck demand.”
ACT also reported that net orders of medium-duty Class 5-7 equipment grew by 33% in May compared to the same month in 2009, boosting year-to-date growth to 18%.
However, with continued weakness in the residential housing market and tightening state budgets, the medium-duty sector has not shown the same level of rebound as the heavy-duty sector, the firm stressed.