The outlook for truck and trailer sales in the New Year remains a modest one, with the need to replace aging equipment offset by continued uncertainty about the strength of the U.S. economy.
“There are always competing forces for and against new sales, but at the end of the day, it comes down to an equation balancing current capacity and the expected growth in tonnage, which in turn is driven by GDP [gross domestic product], industrial production, housing, energy production, etc.,” Paul Seger, vice president-asset remarketing for GE Capital Fleet Services, told Fleet Owner by email.
“Fleets are continuing to replace aged units which tend to have higher maintenance costs in addition to seeking new technology with improved fuel economy,” added Mark Orth, GE Capital’s remarketing manager. “There is still a lot of old equipment that needs to be replaced as some customers have been waiting to see which new technology would prove to be the best and still others have been waiting to see which direction the economy will go.”
November truck and trailer order numbers analyzed by ACT Research and FTR Transportation Intelligence offered a mix of trends, as November’s order numbers dropped off from October’s pace.
Kenny Vieth, president and senior analyst at ACT, said that after a “high-side surprise” in October, Class 8 orders provided some low-side disappointment in November as new and net orders were 22,231 and 21,255 units, respectively, though he stressed for the U.S. and Canada Class 8 orders “generally out-performed” year-ago results.
He also dubbed the current economic climate “The Great OK,” where things are “too good to be sad and too bad to be happy.”
And while he believes there will be a gradual improvement in the U.S. economy in 2014 that improvement will be “lackluster” and the absence of what he calls “economic vibrancy” will keep truck buyers cautious as well.
“It isn’t that there is uncertainty. People are not really worried that everything will fall apart again,” Vieth said. “Until we get stronger economic activity though, we will continue to move more sideways than ahead. If we could get just a little more economic growth … that’s what we are waiting for.”
FTR’s preliminary data showed November Class 8 truck net orders reached 20,915 units and while that’s 6% above November 2012 numbers, it’s down 19% month-over-month. Based on the order pace recorded between September and November, FTR expects Class 8 orders to top out at 266,600 units this year.
"This is the highest number of orders in the month of November since 2010 continuing to show a solid year-over-year increase; however they are not sufficient to indicate a strong beginning to 2014,” cautioned Don Ake, FTR’s vice president for commercial vehicles commented. “Order activity was below our expectations and needs to be stronger in December to fill up first quarter  build slots. The market continues to grow, but slowly.”
Longer-term, FTR projects that order rates for Class 8 trucks will reach just 243,000 units when 2013 numbers are finally tallied up, rising to 262,000 units in 2014 and 275,000 units in 2015. Order projections for trailers will follow a bumpier path, the firm believes, hitting 236,000 units when all is said and done for 2013, rising to 237,000 units in 2014, and then falling back to 215,000 units in 2015.
ACT pointed out that medium-duty Class 5 through 7 orders totaled 18,407 units in November, up 28% year over year while net trailer orders slipped from the robust 43% month-over-month gain in October to November’s less vigorous 3% month-over-month improvement.
“On a year-over-year basis, total net trailer orders of 25,670 units were up 17%,” noted Frank Maly, ACT’s director of CV transportation analysis and research. “Cancellations continued to be low, and that appears to be the result of firm commitments by fleets.” He added that trailer orders were strongest for dry van, flatbed and liquid tanker models in November.
GE Capital’s Orth said that, relative to heavy- and medium-duty trucks, the trailer market looks like it will show the least amount of growth in 2014 but will still be a healthy market compared to where it has come from over the past few years.
“Per ACT Research total trailer builds for 2014 in the U.S. will be consistent with the past two years at about 242,050 units,” he said. “The average age has remained consistent in the last few years but equipment is getting old and needs to be updated. With the continued strong economy comes predicted freight growth and this and other factors should cause trailer demand to remain strong.”