Market Turns Bullish for Heavy Duty Trucks as Orders Surge

November 02, 2017 by Clarissa Hawes

Motor carriers are moving back into the market for big rigs, placing large orders for new trucks in the heaviest Class 8 weight segment.

Trucking firms ordered 35,700 Class 8 trucks in October, a 62 percent increase from September and a 167 percent increase compared with the same month a year earlier, FTR Transportation Intelligence reported Thursday.

“There has been plenty of optimism heading into order season, with fleets increasingly upbeat given improvement in volume and a surging spot market, which is expected to contribute to healthy contract rate increases for carriers,” said Michael Baudendistel, an analyst at Stifel Financial Corp.

Many large fleets are overdue replacing older trucks, Baudendistal said in a report to investors.

The industry is starting to compile deals like the US Xpress multi-year order reached in October for Navistar International Corp. trucks. The large Chattanooga, Tenn., trucking company will spend more than $200 million to purchase 1,665 International LT semi-tractors from Navistar. The deal includes 1,400 sleeper trucks and 265 day cabs.

The stronger than expected orders logged by manufacturers in October indicate that 2018 should be a robust year for truck sales. Stifel projects the industry will build about 280,000 trucks next year, a 12 percent increase over the pace of this year.

Total orders for the North American market over the past 12 months have totaled 261,500 units.

Other analysts agree.

“The market seems well-situated for a strong 2017 production environment to persist into 2018,” said Jonathan Starks, chief operating officer at FTR.

New order growth “was not uniform” for all truck makers, but nearly every manufacturer saw an increase from September to October, he said.

“The market continues to follow our expectations and highlights that the market fundamentals remain solid as we approach 2018,” Starks said.

Manufacturers took preliminary orders for 226,400 Class 8 trucks during the first 10 months of this year, a 55 percent increase compared with the same period a year earlier, according to ACT Research.

A broader set of North American truck orders – Classes 5-8 trucks – improved to levels not seen since December 2014.

Seasonally adjusted, orders rose 5.7 percent from 43,500 trucks in September to 48,900 trucks in October, said Kenny Vieth, president and senior analyst at ACT Research.

In its report, ACT Research estimated there were orders for 36,200 trucks in the Class 8 segment, up 160 percent over the same period a year ago, which “significantly surpassed expectations.”

“October’s preliminary orders clearly put upward pressure on ACT’s expectations for Class 8 demand next year,” Vieth said.

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