Heavy-Duty Truck Orders Fall to Lowest Level Since 2010

August 05, 2019 by Jerry Hirsch, @Jerryhirsch

The market for new Class 8 trucks continued to deteriorate in July with motor carriers placing orders for just 9,800 vehicles. That was the first time since 2010 that new monthly bookings fell below 10,000.

July orders plunged  82 percent compared with the same period a year earlier, according to research firm FTR Transportation intelligence.

“Fleets continue to take a wait and see approach to 2020 equipment. Potentially higher equipment costs, uncertain demand and enough available capacity in the market are keeping order activity at bay,” said Jonathan Starks, an FTR analyst.

After several years of robust sales and sold-out production capacity, truck makers face a “market correction,” said Kenny Vieth, president of ACT Research, an industry consulting firm.

“There is a gap between the perception that things remain A-OK in the heavy truck business on the one hand and the rapid erosion of transportation fundamentals on the other. ACT has been warning subscribers for months about the possibility of a slowdown into the end of 2019,” Vieth said.

He said a weak freight market and deteriorating shipping rates across North America have combined with a still-large backlog “to bedevil new Class 8 orders.”

ACT Research pegged July’s orders at 10,200, slightly higher than FTR’s 9,800 estimate.

Vieth believes the industry has racked up two quarters of negative growth and has tumbled into a recession.

Weaker motor carriers are failing.

Terrill Transportation Inc. of Livermore, Calif. ceased operations late last month.

LME trucking in New Brighton, Minn., also abruptly shut down last month. It closed 30 delivery centers in multiple states and laid off hundreds of workers.

Also in July, Timmerman Starlite Trucking, Inc. of Ceres, closed suddenly, ending service in 11 western states.

Earlier this year Youngstown-based Falcon Transport Co. shuttered, letting 550 workers go. It ran into financial trouble after a nearby General Motors factory closed. New England Motor Freight shut down its trucking operations and laid off 233 workers statewide In March.

“Those who are getting out now were most likely the carriers that would not have survived over the last couple of years,” if not for high shipping rates in 2017 and 2018, Starks said.

FTR believes the industry is weakening but is not in a recession.

Truck production backlogs at manufacturers remain high, Starks told Trucks.com. But they are falling rapidly as order activity has weakened.

“Orders aren’t likely to show any real positive movement until we hit the fall ordering season and carriers have better visibility into 2020,” he said.

The industry will build 353,000 trucks in the largest Class 8 weight segment this year, according to FTR estimates. It will fall back to about 275,000 vehicles next year.

“The market is still not hitting a recession-type level,” Starks said.

Jerry Hirsch July 30, 2019
A broad coalition is making another attempt to repeal a century-old excise tax on heavy-duty trucks after failing twice in recent years to move the legislation through Congress.

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