HDT Factbook 2023: Class 8 Truck Orders and Backlogs Among Key Equipment Concerns – Equipment
Dive into 2023 medium- and heavy-duty truck trends and explore backlogs, trailers, and maintenance costs.
Source: Canva/HDT illustration
Production of medium- and heavy-duty commercial vehicles improved steadily throughout 2022, and OEMs were built to full capacity in 2023. Sales, orders and backlog trends are covered in the HDT 2023 Factbook, HDT’s annual snapshot of where the trucking industry is, where was, and what its current long-term trends are.
About 309,615 Class 8 units were sold in 2022. Seasonally adjusted Class 5-7 retail sales for 2022 were close to 230,000 units.
So far this year, demand remains strong with replacement demand continuing to rise, but we expect capacity growth to slow due to lower capital spending, following lower prices and fleets ceasing hiring or declining headcount.
Class 8 orders tracked by ACT Research rebounded slightly in May, after a weak April. May orders rose 30% year-on-year to 15,623 units, with seasonal adjustment orders rising to 19,000 units.
(As we went to press, the ACT announced that Class 8 claims for June rose 9% year-on-year to 16,773. A seasonal adjustment would bring that number to 20,300.)
With 142,000 units built year-to-date as of May and 195,000 units in the backlog scheduled for 2023, there aren’t a lot of empty construction slots available to claim in 2023.
Through the combination of a weak annual seasonal demand period (typically April to August) and healthy supply chains that enable increased production, Class 8 backlogs will be on a downward trajectory until demand boards open in 2024, ACT noted.
Meanwhile, market demand in recent months has favored trucks over tractors. Tractor orders rose 7% year over year in May, while truck orders rose 19% compared to the previous year. This trend continued more strongly in June, as tractor orders fell 1% year over year while truck orders rose 28%.
Class 5 truck orders rose 61% in May, pushing Class 5-7 medium-duty truck orders overall up 35% year over year to 20,141 units (21,900 units seasonally adjusted). Seasonally adjusted orders were 16% above the average of 18,000 per month over the previous 12 months, and 22% above the year-to-date average of 17,900.
The decline in Class 8 backlog in June was in line with expectations as seasonally weak orders led to strong production. For second-half 2023 production, only 11,000 units of the June backlog will stabilize in 2024.
Source: ACT Research
Average Class 5-7 net orders rose 27% year-over-year in May with 19,000 units (up 3% from April), and retail sales were up 26% year-over-year to 22,800 units.
Source: ACT Research
Medium and heavy truck market
More than a third of Class 8 trucks sold in the United States last year were Freightliner badged.
Source: HDT analysis of Ward intelligence data
According to the American Truck Dealers Association, Class 8 truck sales topped 254,000 units in 2022, up nearly 15% from 2021. Medium-duty truck sales fell 6% to 221,834, ATD reports.
In HDT’s analysis of U.S. commercial vehicle retail sales data from Ward’s Intelligence, compared to five years ago, Freightliner’s 2022 Class 8 market share is essentially the same as it was in 2017. Both International and Volvo saw market share increase By 2 percentage points.
In medium duty, if you just look at Class 7, Freightliner has almost half the market share at 49%, with International in second place at 30%. At the lighter end of the spectrum in the 5 Series, Ford has the lion’s share of the market at 47%. In Class 6, Freightliner and Ford compete with about 30% each, followed by Navistar.
Private fleets expand business cycles
Respondents to this year’s National Trucking Council Benchmark Survey reported their heavy equipment trade cycles at 6.35 years, slightly ahead of last year’s 6.3 years (tied for the fastest equipment turnovers in the survey’s history).
As measured in mileage, commercial cycles increased to 643,000 miles, which is 43,000 miles more than last year’s 620,000-mile replacement cycles for the average Class 8 tractor.
These trade cycles include all Class 8 equipment, both owned and leased, which typically have more active trade cycles. When those fleets that lease the majority of their equipment are removed, commercial cycles lengthen slightly, by approximately two years in the case of those fleets that own the majority of their equipment and by one year for those fleets that acquired equipment using the bulk purchase/leasing approach.
For companies that lease 90% or more of their Class 8 equipment, commercial cycles are reported as 5.3 years and 512,800 miles. Last year, those commercial cycles averaged 5.5 years and 512,000 miles, and the year before, the average commercial cycles for this group was 6 years and 574,000 miles.
For those fleets with 90% or more of their Class 8 equipment, commercial cycles are 7.2 years and 735,800 miles. Both reflect increases compared to last year’s results. Last year, commercial cycles for this combination were reported at 6.9 years and 662,440 miles; The previous year was 6.6 years and 656,000 miles.
This is clear evidence of the fleet’s strategy of extending business cycles, especially when they are in ownership mode.
The National Private Trucking Council’s benchmarking survey shows private fleets’ strategy for expanding business cycles, especially when they are in an ownership position.
Source: National Trucking Council
Fleets are getting more options in the used truck market
Used Class 8 values peaked in the first half of 2022, breaking the $100,000 ceiling for the first time, according to U.S. truck dealers, but have declined since then.
According to ACT Research, Class 8 used retail volumes (same dealer sales) improved 12% in May compared to the previous month. Sales typically slow by 4% to 5% in May, so the increase was not only uncharacteristic, but also represents a bit of a puzzle in the context of current economic and shipping environments. As owners, operators and small fleets in particular exit the industry, inventory continues to increase. This provides remaining fleets with more options than they have in a long time, ACT analysts explained.
Auction sales rose 32% in May from the previous month, while dealers sold 19% fewer wholesale units. Combined, the overall market swelled 13% month-on-month in May.
Compared to last year, the retail market was 17% larger. The auction and wholesale sectors also expanded by 43% and 79%, respectively. Their combined performance has seen the overall market rise 31% from a year ago.
Despite the current weak economic shipping conditions, the comparison highlights how difficult conditions will be in 2022 in terms of inventory scarcity.
As owners, operators and small fleets exit the industry, the inventory of used trucks continues to increase.
Source: ACT Research
Fleets are still waiting for new trailers
At nearly 9,700 units, net trailer orders for May were down 4% month over month and down 51% year over year. Seasonally adjusted orders, at 12,000 units, were down 27% from the previous month and 50% from a year ago.
May orders were still on a seasonal decline, with a recent order backlog near the record level. Dry trucks were down 61% year over year, while net refrigerated orders were negative, as cancellations outpaced orders.
Seasonal forecasts indicate that orders are likely to remain weak over the next few months, especially with order backlogs at a near-record level. Although the backlog has decreased, most fleets in need of trailers are still waiting in line.
As for cancellations, fleet commitments were mixed in June. Total cancellations fell to 2.8% of backlog, compared to a rate of 4.2% in May. Most cancellations are coming from the dealer network, although fleet and model year cancellations and rebookings are being reported as 2024 order boards begin to open and slots push out.
By category, dry truck orders in May were down 61% compared to a year ago. Net refrigerated orders were negative, with cancellations outpacing orders.
Source: ACT Research
Repair and maintenance costs
Repair and maintenance costs in 2022 rose 12% to an industry average of 19.6 cents per mile, according to the American Transportation Research Institute’s annual cost survey. This rate of increase was slightly lower than the 18% increase in 2021, thanks to carriers’ improved ability to acquire new trucks and a decrease in the average age of trucks.
This year ATRI added two new maintenance standards:
- Distance traveled between unscheduled breakdowns, 50,547.
- Percentage of maintenance carried out within the company: 59%.
It found that carriers that performed more maintenance in-house tended to have lower repair and maintenance costs per mile. Large carriers are more likely to use in-house service departments. Fleets of more than 1,000 trucks performed 66% of maintenance in-house. Fleets of 26 to 100 trucks performed 51% of maintenance in-house.
The Technology and Maintenance Council of the American Trucking Associations, working with Decisiv, found that combined parts and labor expenses rose 13% between the fourth quarter of 2021 and the fourth quarter of 2022.
This report identified that the largest contributors to repair and maintenance costs are:
- Power plants (35.7%)
- Exhaust (14%)
- Brake systems (5.1%)
(Tags for translation)Class 8
