Orders for New Heavy-Duty Trucks Set Record in August

September 07, 2018 by Alan Adler, @AlanAdler

Motor carriers and shipping companies placed a record number of orders for heavy-duty trucks in August to keep up with growing freight demand.

August orders for heavy-duty trucks surged 150 percent compared with the same month a year earlier, reaching a record 53,100. They grew by 0.9 percent over the July rate.

Booming orders surprised industry forecasters. Truck purchases typically lag in the summer months.

“The two biggest order months [usually] would be October-November or November-December,” said Don Ake, vice president of commercial vehicles at research firm FTR Transportation Intelligence. “Things are at peak levels.

“This is the response you get to the current freight situation,” Ake said.

Freight demand is expected to be strong through at least the first half of next year. A shortage of trucks and drivers has increased freight rates by double digits. That could continue into 2019, analysts said.

The rate of orders placed in the last three months would translate to 700,000 annual orders, said Kenny Vieth, president of ACT Research, another industry research firm.

The manufacturers are running full tilt, building 477,000 heavy-duty trucks in the last 12 months, Ake said.

“Given current industry fundamentals and supply chain issues, we expect production of about 320,000 units in 2018,” said Ann Duignan, machinery analyst for J.P. Morgan. That would exceed 2017 by 25 percent.

FTR revised its production estimate upward to 340,000 heavy-duty trucks.

Most industry watchers think the backlog of orders will be built even though fleets and dealers can cancel orders without penalty if economic conditions worsen.

“Clearly the industry is on a bender, as the August order intake is nearly laughable,” said Kristine Kubacki, industrials analyst at Mizuho Americas.

The “ordering frenzy” will continue for a few months more until inventories start to grow at dealer lots and factories are at full capacity through most of next year, Kubacki said.

Navistar Chief Executive Troy Clarke said Thursday that his company expected to build 255,000 to 285,000 Class 8 trucks in 2019.

“We feel very good about where we are today. We have good visibility into [the first quarter] next year,” Clarke said. “There are not a lot of cancellations. The specifications are defined, and the trucks are lined up in our production lines.”

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