Preliminary Class 8 truck orders remained robust in January, slowing from December but still far outpacing year-ago orders.
Bookings exceeded 42,000 units. That was 17% below December, reflecting a seasonal pullback after the holidays. But orders were as much as 146% ahead of year-ago January numbers when manufacturers braced for a slowdown later worsened by the coronavirus pandemic.
The continued strength in orders reflects fleet optimism that the economy will strengthen as more people received COVID-19 vaccinations. A manufacturing recovery is another positive catalyst for orders. Consumer goods movement remains strong with work and school being conducted in home settings.
“Even as consumers look less hearty – at least in the short term – manufacturing sector indicators show that the industrial economy is shaking off the dust of two years of tepid activity,” said Kenny Vieth, senior analyst and president of ACT Research.
Supply chain stressed
The fourth consecutive month of orders exceeding 40,000 is stressing supply chains, according to Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence. Orders for the previous 12 months total 308,000. Fleets are placing orders that may not be delivered until the end of the year.
“Currently there are shortages of raw materials and component parts, which will result in supply being unable to meet the demand of Class 8 trucks in the short term,” Ake said. That includes semiconductors critical to manufacturing. Daimler AG warned last week that shortages could impact production this quarter.
Suppliers are hindered by the pandemic and material shortages and deliveries of imported parts are delayed up to two weeks at the ports, Ake said.
“The supply chain is struggling after the surge in demand following the economic restart,” he said. “Now companies are having problems hiring back enough workers due to virus concerns and protocols. Also, the steel plants took longer than expected to fire back up.
“Our industry is very skilled and experienced in dealing with roadblocks,” Ake said. “It will handle this situation better than other sectors. When the vaccine enables employment to increase and the other bottlenecks are removed, this will end up being a robust year for Class 8 sales.”