Heavy-Duty Truck Orders Continue Steep Decline in April

May 02, 2019 by Alan Adler, @AlanAdler

Orders for heavy-duty truck orders have declined steeply this year. That comes as fleets take deliveries of last year’s record purchases and juggle remaining orders.

The estimated 16,400 orders logged last month were the lowest for an April since 2016, FTR Transportation Intelligence said.

Another trucking industry information firm, ACT Research, said April orders were even lower. It estimated motor carriers ordered just 14,800 Class 8 trucks last month. That was 57 percent below April 2018, when a strong U.S. economy bolstered by business tax cuts juiced orders.

BIG DECLINE FROM 2018

Trucking companies have ordered 63,000 trucks year to date. That’s a 63 percent decline from the 169,186 orders placed during the same period in 2018. Still, because of record orders last year, truck manufacturers have an eight-month backlog of vehicles to build, said Kenny Vieth, ACT president and senior analyst.

“We continue to contend that current order weakness has more to do with very large Class 8 backlogs than with the evolving supply-demand balance,” Vieth said.

This year’s decline is also due to economic uncertainties in the trucking industry, Anne Duignan, an analyst with J.P. Morgan Research, wrote in a note to investors Thursday.

“Overall, U.S. macro indicators for truck demand are mixed,” Duignan said. “Further, trucking wages were up 3.9 percent year over -year as of February – the latest month available – weighing on fleet profitability. “

CANCELLATIONS?

The U.S. economy grew at a stronger-than-expected 3.2 percent in the first quarter. Most economists predict that rate will slow later this year. That could lead to cancellations of orders already placed.

Fleets are keeping most orders on the books for now. Some are being rescheduled to get trucks produced sooner at factories with available openings, said Don Ake, FTR vice president of commercial vehicles.

“They remember what happened last year when they needed trucks, but could not get enough of them,” Ake said.

New orders are expected to remain soft until ordering for 2020 begins this fall, Ake said.

Freight rates continued to fall in April as the number of available trucks exceeded the number of loads, DAT Solutions said. DAT tracks rates for spot and contract shipments. Seasonal demand is beginning to drive rates higher along routes where fruits and vegetables move, the company said.

“In March, and really the first quarter in total, tonnage was negatively impacted by bad winter storms throughout much of the U.S.,” said Bob Costello, chief economist of the American Trucking Associations.

IMPROVEMENT?

Freight demand should improve in the April-June period, he said.

Small fleets and owner-operators chasing what remains of last year’s booming freight market snapped up newer-model used trucks in the first quarter. Prices were 10 percent higher year over year, according to ACT.

The 50 biggest trucking companies increased their share of the for-hire market from 27 percent to 38 percent from 2009 to 2018, according to an analysis from SJ Consulting Group and the ATA. There are more than 500,000 registered motor carriers in the U.S.

Eileen Falkenberg-Hull May 2, 2019
Discounts and deals are scarce this month, but GMC, Nissan, Ford and Honda are offering low APR rates that are worth a closer look.

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