Preliminary net orders for Class 8 trucks reached 19,000 units in August, down 9% from a year ago. But they were the highest in six months.
Bookings will begin to increase in September as the 2024 ordering season accelerates. But it’s hard to know how much pent-up demand remains from the pandemic and two years of supply cuts, and whether that’s dampening new orders.
“Despite growing order activity, year-over-year comparisons will look dire through November due to record order activity in the second half of 2022,” said Eric Starks, president of FTR Transportation Intelligence. “Actual unit order levels will be more important in the short term than the year-to-year change in market strength analysis.”
The impact of taking orders to avoid higher prices and cleaner diesel trucks required in California is uncertain.
“For Class 8, August is the last month of the ‘weak ordering season,’ the four-month period that begins in May,” said Kenny Vieth, ACT Research president and senior analyst. news. “Adding to the downward pressure, the 2023 construction plan has been substantially filled since the end of the 1st quarter.”
August data shows that fleets are not shying away from ordering new equipment, which bodes well for the second half of the year, Starks said.
Total Class 8 orders for the past 12 months totaled 294,000 units, FTR said.
The used truck market is rebalancing
The inability to acquire new trucks for much of 2020 and 2021 has led fleets to hold trucks longer than the typical four- to five-year marketing cycle. Now that orders are filling up again, used trucks with higher mileage are flooding dealerships and auctions, driving prices lower as fleets rebalance.
Many owner-carriers are surrendering the Department of Transportation’s driving principles and contracting with large fleets now that contract fares have been reduced. Still, independent business owner-operators are constantly entering the market.
While [used truck] Values continue to soften, it is encouraging to see many new people entering the fleet,” Steve Tam, vice president of ACT, told FreightWaves in an email. “In terms of volume, retail sales in the data we’re seeing is improving.”
Retail sales of used Class 8s fell 7.8% in July.
“Sales usually drop a percentage point or two in July. So the decline was in line with but greater than expectations,” Tam told a news Thursday. “Including auctions and wholesales, total market volume was down 28% month-on-month in July.”
The retail market was 19% higher compared to July 2022, reflecting older truck deliveries. Yellow Freight’s bankruptcy could potentially add 14,000 cab trucks, mostly day trucks, to the used market. But the bankruptcy process so far has been orderly, disciplined and methodical, Tam said.
“If all this gear was dumped into the stockpile at once, the result conjures up images of a piranha-feeding frenzy,” he said. “While it is still very early in the process and there are no guarantees, this approach will help minimize the negative impact on used equipment values.”
Editor’s note: Updates with information from FTR Transportation Intelligence.
Relevant Articles:
July 8 class truck orders are up, but replacement demand is still trailing
Class 8 is quietly re-ordering in June as backlogs decrease
State-of-the-art high mileage used trucks at lower prices
Click for more FreightWaves articles by Alan Adler.