Class 8 orders remained impressive in February for the fifth consecutive month coming in at 44,000 units, a 3% increase over the previous month and 209% jump compared to February 2020, according to FTR Intel. Emphasizing the strength of the orders, February 2021 was the second-highest total on record for any February. Orders total 338,000 units over the past 12 months.
There is intense pressure on freight hauling capacity to get more trucks into service. However, the supply of new trucks is limited due to component and part shortages. In response, fleets continue to place orders in elevated volumes to try to acquire as many tractors as possible.
“There is tremendous pent-up demand for trucks,” Don Ake, vice president of commercial vehicles for FTR commented. “There are severe bottlenecks in the supply chain involving computer chips, wiring harnesses, and a whole host of various parts. OEMs are under intense pressure to deliver as many vehicles as they can as soon as they can.”
According to ACT Research’s Transportation Digest, the heavy-duty truck market exploded off the starting blocks at the beginning of the year, with order numbers that build on 2020’s strong close.
“The massive supply-demand imbalance between freight and drivers in the second half of 2020 lit commercial vehicle demand on fire beginning in the fourth quarter of last year. At the start of 2021, commercial vehicle demand is hot,” said Kenny Vieth, ACT’s president and senior analyst. “As an illustration, over the past four months ending January, Class 8 backlogs doubled. That period included best- and third-best ever orders for Class 8 tractors in November and December.”
“While we are confident that the conditions driving demand should remain in place, what will dictate the trajectory of build, retail sales, and our forecasts will be the industry’s ability to navigate around both traditional and nontraditional supply-chain constraints,” Vieth concluded.
Ake voiced similar sentiments. “The supply chain is so dysfunctional right now and there are so many parts affected, it is difficult to predict when the logjam breaks loose,” Ake added. “The vaccine should help component manufacturers find more workers. There are also lengthy waits at the ports causing delays in imported parts.”
Classes 5-7
According to ACT Research, Classes 5-7 demand, with orders at 25,400 units, slid 4% sequentially but were still up 12% compared to last February. Complete industry data for February, including final order numbers, will be published by ACT Research in mid-March.
“Beyond warmer inflation numbers, there is much to like in the current stream of economic data that indicate broad-based economic activity. As has been the case over the course of this pandemic period, economic growth is being driven by the goods-producing sectors of the economy,” Vieth said. “Consumer spending on goods, a red-hot housing market, a reaccelerating manufacturing sector, and pent-up inventories combine to provide very good visibility to near- to mid-term freight trends. Contract freight rates are at record levels, as are spot rates, after seasonal adjustment. Without injecting stimulus or infrastructure into the discussion, there is a lot to like about freight, the carrier profit outlook, and by extension the commercial vehicle demand landscape.”
Regarding the medium-duty market, Vieth added, “The shift in consumer spending from experiences to goods continues to support providers of local trucking services, as e-commerce has grown by leaps and bounds in the pandemic economy.”
Used Class 8
According to the latest release of the ACT Research’s State of the Industry, U.S. Classes 3-8 Used Trucks, used Class 8 volumes – same dealer sales – and average sale price fell sequentially in January, down 7% and 6% m/m, respectively.
On the other hand, average miles were up 4% m/m and average age reported a 3% uptick from December. Longer-term, same dealer sales volumes were up 19% y/y against January of 2020, while average price was virtually flat with a 1% y/y contraction, average miles changed by a similar amount in the opposite direction, up just 1% y/y, and average age was 2% lower compared to January of 2020.
“Many of the conversations we had with dealers since last month’s publication focused on the weather rather than the market,” said Steve Tam, vice president at ACT Research. “While it is normal for sales to be below average in February, the severe winter storms that blasted much of the country in February made selling used trucks more of a challenge than it usually is during the month. Aside from the weather, the tone remains positive, with observations that all market segments seem to be doing well.”
Looking at the different sales channels for used Class 8 vehicles, Tam commented, “Channel results were uniformly negative in the short-term, but mixed for longer-term time period comparisons, with retail sales making progress, but auction and wholesale activity lower than a year ago.”
