North American truck orders rise ahead of seasonal pickup

The commercial trucking industry flashed another sign of recovery in August as heavy- and medium-duty orders rose month over month, but overcapacity remains a thorn in its side. 

North American preliminary net orders for heavy-duty Class 8 trucks totaled 16,400 in August, up 22.4% MoM but down 16% year over year, according to ACT Research’s monthly report. That followed MoM decreases of 37% and 8% in June and July, respectively. 

Medium-duty Class 5 to Class 7 orders increased 7.5% MoM in August to 17,300, but fell 16% YoY. Orders plunged 30% MoM in July, during the trucking industry’s seasonal summer slowdown. Activity is poised to pickup as seasonal shifts occur, ACT President and Senior Analyst Kenny Vieth stated in the report.  

“Historically, August is the last month of weak orders before the OEMs open their books to next year’s orders,” Vieth stated. “As such, the month enjoys a large seasonal factor that boosts Class 8 orders nearly 12% above nominal levels to 18,600 units.” 

The 18,600 units is a seasonally adjusted number based on the average performance of a particular month relative to the rest of the year. Because August order volume is about 12% below average, ACT divided the 16,400 units by 0.88 to calculate orders as if August was an average month.  

Consumer spending wanted 

While the trucking industry has started to bounce back from a recession in recent months, high inventory levels remain a challenge, Vieth stated in the report. Increased consumer spending would give the industry the shot in the arm it needs to overcome overcapacity, ACT Vice President and Analyst Steve Tam told Equipment Finance News. 

“We’re starting to see some moderate pickup in freight, and the expectation is for more of that,” Tam said. “And so having that additional work is absolutely key to the future success and recovery of the industry. We’re stuck at the bottom of the cycle, and we just can’t get around the curve because of that.” 

Manufacturers also need to stop flooding the market with new equipment, Tam said, but he doesn’t expect that to happen soon. 

“Manufacturers are going to get to the point where there’s so much inventory on the ground and no customers for those trucks that they’re going to be compelled to stop,” he said. “But to this point, that has not happened.” 

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