Truck and trailer orders close the year on a strong trend
Class 8 orders fell 24% year-over-year, according to ACT Research, to 32,287 units thanks to market segments with persistent pent-up demand.
The vocational truck market saw orders rise by 24% year-on-year. Export market orders rose by 91%, and orders destined for Mexico rose by 187%. Class 8 tractor orders in North America were down 34% compared to last year, with U.S. tractor orders down 47% from year-ago levels.
“Build rate was down nearly 10% month-on-month, resulting in 27,999 production units in October,” said Kenny Faith, ACT President and Chief Analyst. “Anecdotally, supply chain issues were the root cause of a lower-than-expected failure despite calming conditions.” However, construction expectations for the first quarter of 2024 remain high.
8 Series construction and retail sales continue to track closely, but retail sales were down month over month, causing inventory to rise, Vieth said.
“For carriers, the long trough in freight rates continues, with little change in spot rates since April,” Vieth said. “The main driver of the weak rates was the delay in increasing private fleet capacity. Since for-hire fleets tend to be first buyers In line, private fleets will be the driver of the Class 8 market’s strength in 2023, adding equipment at the bottom of the cycle and lengthening rate life.
Class 8 orders totaled 255,000 units over the past 12 months, according to FTR. The annual average over the past six months was 233,000 units.
“Construction holes continue to fill at a healthy rate,” said Eric Starks, FTR Chairman of the Board of Directors. “We expected a decline in orders year-over-year and were also not surprised by the decline month-over-month. The overall truck demand picture is steady. Despite weak freight, fleets remain willing to order new equipment, confirming our forecast for replacement demand through 2024.”
Trailer orders are trending up
Initial net trailer orders for October were nominally higher from September to October, at 35,300 units (their highest since December 2022, according to FTR), but were lower compared to last October, down more than 26% year over year, according to ACT research.
Orders over the past 12 months totaled 294,000 units, according to FTR.
Construction improved 4% month-on-month in October but lagged in net orders, so backlogs rose for only the second time in 2023. September was the first month of the year to see an increase in backlogs, according to FTR. While the positive momentum the industry started last month continues, Jennifer McNealy, ACT’s director of market research and publications, added that two months of strong orders does not guarantee the full year.
“It’s still too early to call in the New Year’s order season.” “Data continues to provide mixed messages, with cancellations remaining high, driven primarily by the platform and tank sectors, even as backlogs remain at healthy levels overall and especially in specialty sectors,” she said.
Trailer backlogs compared to production levels are generally in line with historically normal levels, but vary significantly by trailer type, Starks noted, adding that backlog-to-build ratios for truck trailers remain high and should support current production levels. The ratios are much lower for more specialized trailer types, raising concerns about potential future production cuts. On the positive side, orders increased in October for most types of specialty trailers, he said, significantly outperforming dry van trailers and refrigerated truck trailers.
“The backlog to construction ratio has been well above five months overall,” with no construction slots available in some niche sectors until late 2024 at the earliest, McNealy added.
“We have heard that order discussions are taking place, and it appears that quotes are continuing to shift to ‘booked’ business,” she said. Using October initial orders and corresponding OEM build plans from the October State of the Industry: U.S. Trailers report (September data) to obtain On guidance, we expect trailer backlog to increase by approximately 7,300 units to approximately 146,100 units when October data is complete. Released. Since this number is derived from estimated data, note that there will be some variation in the reported backlog when the final data is collected.