Preliminary Class 8 truck orders in North America topped 40,000 in October for the first time in two years. Consumer goods demand supported higher freight rates and trucking profits, resulting in robust equipment orders.
FTR reported net orders soared to 40,100 units, the first time orders surpassed 40,000 since October 2018. Bookings were up 26% from September and 83% year over year. On a rolling 12-month basis, Class 8 orders stand at 215,000 units.
ACT Research, a competing analysis firm, pegged preliminary North American Class 8 net orders at 38,900 units, up 27% from September and 78% higher than October 2019.
After coming out of the lockdown stage of the pandemic, which is again raging in many parts of the U.S., new equipment orders for 2021 delivery remain robust. Fleets continue to order Class 8 trucks in large quantities for 2021 delivery.
Consumer retail sales rose for the fifth consecutive month in September, according to the U.S. Department of Commerce.
The turning point
“September was the turning point for the Class 8 market,” said Don Ake, FTR vice president of commercial vehicles. “Fleets became much more confident about future freight demand and began placing large orders to replace older units and for expansion purposes, as capacity tightened.
“In just a few months, the industry has gone from fear, to hope, to optimism,” he said. “It appears the industry has sloughed off the uncertainties about the pandemic for now.”
Trailer orders in September were the second-highest on record at more than 50,000.
Carriers are making big money because of higher rates, a trigger to equipment orders, said Kenny Vieth, ACT Research president and senior analyst.
“There is a long relationship between the strength in carrier profitability and U.S. Class 8 tractor demand,” Vieth told FreightWaves. “When truckers make money, it affords them the opportunity to upgrade their fleet, buy new equipment and lower their tax bill.”
Consumers driving demand
Consumer demand is almost entirely responsible for the current freight market.
“If manufacturing starts to rebound, sales go even higher,” Ake said.
Manufacturers and suppliers that shut down for most of March and April could see some pullback if the virus leads to more shutdowns. But their plants are now set up to safely operate despite the virus. That was untrue during the first wave in March and April.
“There is a symbiotic relationship between heavy-duty freight rates and medium-duty demand,” Vieth said. Clearly, the shift in consumer spending from experiences to goods has been beneficial for the providers of local trucking services, as e-commerce has grown by leaps and bounds during the pandemic.”