Preliminary orders for new Class 8 trucks tumbled again in November after one month of improved bookings, new evidence that a slowing manufacturing economy is sapping all but critical replacement demand.
FTR Transportation Intelligence reported orders by the six major brands totaled 17,300 units, the slowest November since 2015 and 39% below November 2018, when a frenzied truck order boom was starting to lose steam.
Sluggish orders are resulting in layoffs of hundreds of production workers by Daimler Trucks North America (NASDAQ: DDAIF), Volvo Trucks North America (NASDAQ: VLVLY), Paccar Inc. (NASDAQ: PCAR) and Navistar International Corp. (NYSE: NAV).
The supply chain is also affected. Engine manufacturer Cummins Inc. (NYSE: CMI) is laying off 2,000 white-collar employees globally in the first quarter of 2020.
October and November are historically months when fleets place orders for the next year. Some signs of that appeared in October, which broke 10 consecutive months of lower year-over-year orders. November orders were down 21% from October.
Other than a couple of manufacturers reporting decent activity, total orders fell below expectations, FTR said.
“The freight market downturn worsened in the past month, and uncertainty surrounding trade and tariffs continue to weigh on truck buyers’ psyches,” said Tim DeNoyer, ACT Research vice president and senior analyst. ACT reported 17,500 preliminary North America Class 8 orders for November.
The stalling of freight growth is causing fleets to exercise caution in placing orders for 2020, said Don Ake, FTR vice president of commercial vehicles.
“There will still be plenty of freight to haul, so we expect fleets will continue to be profitable and to replace older equipment,” he said. “However, there won’t be a need for much additional equipment on the roads.”
Four months of lower manufacturing activity and ongoing uncertainty over tariffs are destabilizing prices and supply chains.
“The industry thrives on stability, but we are now on a rocky road,” Ake said.
The rolling 12-month average for Class 8 orders is now 180,000 units. The industry’s production backlog has fallen below 130,000 units, less than half the orders waiting to be built in December 2018. Retail sales are still expected to set a record of 310,000 or higher this year.
Private fleets are still adding new tractor capacity, but large for-hire fleets are signaling they will “right-size” the number of trucks to the available freight to haul, DeNoyer said.
Dr. Hof
The ELD mandate is a bigger problem for new truck manufacturers than tariffs. Wal-mart just released a “Black Friday” sales report which clearly shows U.S. sales of Chinese goods are NOT declining due to tariffs, so take tarrifs out of the equation. However, hundreds of thousands of highly experienced truck drivers are threatening to leave the truck driving industry immediately following the December 18th, 2019 deadline for installing bogus GPS tracking devices on Owner Operator trucks. Many men have already thrown in the towel and sold (or threw away) the keys to their trucks. These drivers, are not planning to buy new trucks, as many of them once did on a 4 to 5 year basis. Barak Hussein Obama knew that GPS tracking of privately owned vehicles would bring havoc and loss to the truck driving industry, a powerful way of pushing out a Capitaism based logustics system and replacing it with a Socialist agenda (11 hours driving time makes everybody “equal” or Socialism at its core). Taking any industry which thrives on Capitalism and injecting outright socialism is dangerous and WILL lead to collapse, just as Obama had planned. We American’s can fight all this by demanding an Elite National Driver License (for U.S. Citizens ONLY) and a full-blown Jimmy Hoffa style Unionization for ALL TRUCK DRIVERS IN AMERICA. Yes, it’s past time to form a UNION powerful enough to thwart the crimes of companies like Swift, Werner, C.R. England , DHE , Schneider and other billion dollar carriers. Teamsters….where are ya? Step in and step it up for ALL driver, not just your buddies.
Elvis Durant
I think this issue is more than an Obama or Trump or Bush issue. Tabloids like Freightwaves, Overdrive, etc only painting or sugar coating/hiding THE MESS of a cesspool this trucking industry has become. FMCSA still working with obsolete regulations from the 1930s and they think that the stupidity of these late regulations are gonna make things better. Gimme a break! And I agree with you, I’m officially done with trucking as of 2 weeks ago. Sold truck and preparing to sell flatbed and disbanding my authority! I keep telling everyone. Go and get an education. Lots of trade to learn out there for cheap and nobody has to torture themselves behind a truck steering wheel!!!!