Truck orders boom, but why?

What exactly is going on with all these truck orders? ACT Research reported that January Class 5-8 preliminary orders came in at a surprising 80,400 units. Class 8 orders alone accounted for 48,700 units, their best month since March 2006, which occurred ahead of 2007 EPA emission standards changes.

Steve Tam, vice president of ACT Research, tells FreightWaves that while there may be some expansion of fleets – particularly among the mid-tier fleets – there is no widespread evidence of capacity expansion taking place.

“Most of the larger fleets were in the market in the October-December timeframe, and we’re not hearing from them that they are expanding their fleets,” he says. “There is very little in the way of fleet growth going on. Now, down in the mid-tier company, if I am a 500-truck fleet, maybe I will try to add 25 or 50 trucks and try to find drivers, knowing that I would be stealing them from other fleets, or construction.”

He also doesn’t think the huge buy in January is tied entirely to the tax plan, although he believes there is some effect, particularly as retailers and manufacturers make investments. “I think the trucking community is thinking [things will be good for a while],” Tam observes.

Orders for 2017 finished the year strong and many observers expected a traditional seasonal dropoff in January, but that didn’t occur – in fact, it was quite the opposite as orders exceeded expectations. Tam believes that much of the January activity is still related to a confluence of events – tightening capacity, rising rates, ELDs and the lack of drivers.

“We’ve finally been able to put some freight growth on the board in the second half of 2017 after seven consecutive quarters of no or little growth, so that got the ball rolling,” he says, adding that market share battles between OEMs also drove discount programs that kept fleets engaged.

In the end, it’s likely that fleets are just feeling good about the economy and freight growth and orders are reflecting that. Tam cautions about reading too much into a single month’s orders, though, suggesting that looking at several consecutive months of data is more indicative of the overall sentiment of fleets. For instance, if February orders come in in the low 20,000 range, then January may have been nothing more than a “pull forward” of orders, he says.

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