Lower-than-expected Class 8 truck orders in December had little impact on the seasonally adjusted five and a half months it takes to build and deliver a new unit. Strong orders for commercial trucks, demand in Mexico and exports reduced slack bookings for off-road tractors.
Preliminary North American net orders of 26,500 in December came in 15,000 below November. Seasonally adjusted, hiring was closer to 20,900, ACT Research said.
In 2023 orders were down 7% compared to 2022
Orders for the full year 2023 fell to 278,500 units, down 7% from 2022, according to ACT. Truck makers produced about 337,000 Class 8 trucks last year — far more than orders were supported. But the roughly 180,000-unit backlog left the industry in good shape heading into 2024, Kenny Vieth, ACT president and senior analyst, told FreightWaves.
FTR Transportation Intelligence reported full-year order numbers at 253,000 with the annual rate over the past six months at 302,000 units. The last quarter of the year ran at an annual rate of 362,000 units.
Category 8 orders fall under the 2023 final report
FTR set December preliminary orders slightly higher at 26,620. This was 26% lower than November and 6% lower than December 2022.
“Despite the slight year-over-year order decline in December, the market continues to perform at a historically high level,” said Eric Starks, president of FTR. news. “Even as commodity markets have been weak for a long time, fleets are still ordering equipment.”
Frozen demand from 2021 that followed the pandemic has largely eased in 2023, according to ACT. About 12,000 new trucks were exported in 2023. Thousands more used Class 8 tractors also found their way to Central America, the Persian Gulf and some parts of Africa, Vieth said.
A soft landing is sought for Class 8 equipment in 2024
“The tractor market is unfortunately over-capitalized, so there is no avoiding some slowdown in 2024,” said ACT’s Vieth. “There are lower lows at the threshold due to continued strength in the professional, Mexican and export markets.” The Mexican economic recovery helped it pull ahead of China in July as the largest trading partner of the US
“As the Mexican economy has revived, demand has been limited because U.S. and Canadian truckers were first in line,” Vieth said. “You had a very weak Mexican new truck market before the pandemic. As a result, the age of the fleet is as old as it has been in 20 years.
“We have been talking about renewal for a decade. But between the supply chain disasters and COVID, the last two years have been more than honest service.”
Professionals call for a pillar of support, but pull orders could go deeper
Strong commercial truck orders needed for commercial construction and oil production will continue in 2024.
“There’s a lot of bricks and mortar that goes after infrastructure and CHIPS,” Vieth said.
Fleets and dealers increased orders in California last year ahead of the long-delayed Advanced Clean Fleets rule that was supposed to begin setting quotas for purchases of zero-emissions trucks this month.
“You had a pull forward in 2023 because of California, so that’s going to get nasty in 2024,” Vieth said. “The question becomes as you look at the EPA (2027 nitrogen oxide emissions rules), when does that happen [pull-ahead] principle?
“The OEMs will say they’re going to do everything they can to get their customers to start spending money in 2024 because they want to make that ’24 as shallow as they can. But because these ancillary markets are doing well, that helps with a soft landing. We’re calling it the best recession ever.”
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