Strong freight demand and a healthy economy pushed first-quarter orders for heavy-duty trucks to their highest level since 2006.
Orders for trucks in the heaviest Class 8 weight segment reached 133,900 for the quarter, a 98.4 percent gain compared with the same period a year ago, according to industry research firm FTR Transportation Intelligence.
Class 8 truck orders were the highest for any quarter FTR has tracked.
An improving economy combined with changes to tax law that encouraged investment by business owners have contributed to the strong truck order growth, research analysts at Stifel Financial Corp., said in a report to investors Tuesday.
ACT Research, another trucking consulting firm, estimated orders of 136,307 Class 8 trucks in the first quarter, a 98.6 percent increase compared with the same period a year earlier.
That was just below the record first quarter of 2006, when carriers ordered 140,742 Class 8 trucks, said Kenny Vieth, president and senior analyst of ACT.
Class 8 orders exceeded 40,000 trucks for the third straight month, he said.
Motor carriers are placing big orders to lock down manufacturing slots at the truck makers, said Don Ake, vice president of commercial vehicles of FTR.
“Fleets need more trucks to handle huge freight demand and continue to order trucks at record-setting rates,” Ake said.
The robust order rate is trickling down to smaller commercial trucks.
Orders for medium-duty Class 5-7 trucks topped 84,700 for the first quarter, a 20.4 percent increase compared with the same period a year ago, Vieth said.
It was the strongest first quarter since 2006, he said.
Stifel’s projection for Class 8 truck orders is 325,000 for 2018 and could grow higher. That would be a 9.6 percent increase from ACT’s estimate of 296,440 trucks sold in 2017.
However, investors are wary of current production and earnings levels and are “looking for further evidence that 2018 will be the peak as, historically, declines from peak production have been severe and have come after one or more 300,000-plus Class 8 production years,” Stifel said in its report.
Its forecast for 2019 is that truck production will remain “fairly stable at high levels” as contract pricing for freight boosts motor carriers’ bottom lines.
Increased replacement demand of aging trucks should also aid production numbers in 2019 as a “large population of trucks retailed at the prior 2014-2015 peak” are nearing the end of their four- to five-year trade cycles.