Today’s pickup: Strong numbers on truck orders; Norfolk Southern hearing it again

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Good day,

Both ACT Research and FTR reported all-time record high monthly numbers in August for class 8 truck orders. ACT reported 53,100 orders, while FTR reported 52,400 orders. In the case of FTR, they reported that their figure is up a whopping 153% year-on-year. ACT’s numbers are up 150%. “Preliminary data indicate that during the month of August, NA Class 8 orders rose 0.9% month-over-month and 150% from August 2017,” Kenny Vieth, ACT’s President and Senior Analyst, said in a statement accompanying the numbers. “Super-strong orders in June and July are likely pulling large fleet orders ahead in the schedule, as truckers race to reserve build slots in a market where demand is running well above capacity.” ACT also said the annual rate of orders, based on June to August, is 700,000. There had been reports of slow OEM output, but FTR, in its statement, said that appears to be over. But FTR’s Don Ake, vice president of commercial vehicles, said “the supply chain remains tight, and fleets and dealers continue to place large orders to lock down build slots in 2019.”

Did you know?

According to ATRI research, the average cost incurred from a head-on truck collision is $17,170. But if the truck rolls over, it’s almost three times as expensive: $50,611.


 “Are there major differences that could prevent Norfolk Southern from getting to CSX’ levels now, or are these just two railroads taking different paths to get to the same place?”

–Cowen transportation analyst Jason Seidl, speaking to Norfolk Southern CFO Cindy Earhart at the Cowen transportation conference, on the comparison—unfavorable to NS—of that company’s operating ratio compared to rival CSX.

In other news:

It may not all be diesel fuel

Goldman Sachs thinks the market for scrubbers on ships under IMO2020 will be strong (Platts)

Big truckers enter the technology game

They’re not waiting for others to build the tools (WSJ)

Diesel particulate filters can be taxed, court says

The question was surrounding the tax status of DPF (LandLine)

More freight moving on rail to Europe from China

Significant growth numbers are being recorded (The Loadstar)

WalMart places an order with Tesla       

WalMart Canada is buying more Tesla trucks on its way to an emissions-free fleet (CTV News)

Final Thoughts

The reaction during earnings season to Norfolk Southern’s operating ratio in comparison to CSX’s was fast and severe. CSX was at 58.6% and Norfolk Southern was at 64.6%. That reaction occurred in late July. Yesterday, at a forum sponsored by Cowen, Norfolk Southern CFO Cindy Earhart had to face the same questions. What was interesting was not the specifics of her response, which were forward-looking and positive but not specific, but the fact that at least two times she referenced Norfolk Southern’s third quarter earnings call. She hinted not so much that there would be a big announcement that day, but that the investor community’s concern over that gap would be addressed. She’s now set off what could be some significant anticipation; it will be interesting to see what is said. Based on last year’s date, assume that the earnings call will be the final full week of October.

Hammer down everyone!

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.