New data from two leading trucking industry aggregators shows Class 8 truck orders surging for a second straight month in October to more than 42,000 units.
September’s orders rose to records above 53,000, according to ACT Research and FTR Transportation Intelligence. And now, with their preliminary data from the month just concluded, both see a healthy trend for new heavy-truck production, which has been restrained the last two years by a clogged supply chain and chronic shortages of many critical manufacturing components such as semiconductors. Subdued OEM new-vehicle output has been answered most of this year by a surging and then subsiding used-truck market.
“October was the turning point for the Class 8 market,” said Charles Roth, commercial vehicle analyst for FTR, which on Nov. 3 reported new-truck orders of 43,200 for last month.
“The strength in orders reflects 1) OEMs having opened their order boards for 2023 more broadly, and 2) ongoing pent-up demand, with tailwinds from strong carrier profitability and elevated fleet age proving resilient,” added Eric Crawford, VP and senior analyst for ACT, which called its data from October that showed Class 8 orders of 42,500 units “robust.” ACT will publish final data from its State of the Industry: Classes 5-8 Vehicles report by mid-November.
See also: Final ACT data shows 12% slip in September used-truck sales
“Net orders in October continue to solidify the notion that there remains a tremendous amount of pent-up replacement demand in the market due to the constricted production environment of the past two years that has limited many fleets from replacing aged equipment,” FTR's release said.
In that release, Roth added: “While we face headwinds in the freight market, overall fleet sentiment remains optimistic. While some OEMs have indicated that they have implemented allocation plans for dealers, the retail channel is another segment of the market that has yet to be able to maintain sufficient levels of inventory due to the limited availability of supply.”
“OEMs are now filling build slots well into Q2 and the early part of Q3 2023,” he said. "Component shortages continue to be a week-to-week issue; however, the overall sentiment from manufacturers is optimistic that improvements will be made in the coming months and throughout the first half of next year.”
ACT’s Crawford noted: “We continue to expect a freight recession and an eventual economic recession (mild to medium in magnitude), but OEMs at this point have clear visibility to a strong 1H’23 (barring any unforeseen cataclysmic events).”
FTR’s Roth cautioned, however: “With two extremely strong months of net orders [in September and October], there is the potential that we see a gradual decrease month-over-month in net orders as we close out the year.”
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October order activity was elevated, but it actually was down 23% from September’s record surge, according to FTR. But orders are still up 77% year-over-year compared to this time in 2021. Class 8 orders now total 271,000 units for the last 12 months, the FTR release noted.
ACT also reported Classes 5-7 orders of 23,400 units. Of medium-duty orders, Crawford added: “MD demand was solid, albeit against somewhat challenging comps. Over the past 12 months, the MD market has seen 234,200 orders booked.”
ACT cites truck orders as sign of 'resilient' business conditions
In mid-October, ACT drew from the same State of the Industry: NA Classes 5-8 report to conclude that business conditions were “winning the battle”—for now—against interest rate increases, though the Fed this week hiked rates by three-quarters of a percentage point for the fourth straight time and the sixth time overall since March.
To draw its conclusions on the state of business conditions for trucking, ACT cited the “giant steps” that heavy-duty and medium-duty truck orders took in September compared to August when orders reached just 21,600 units but actually were the highest of 2022. Orders in July were their lowest of the year, just 10,600, according to FTR, and 11,400, according to ACT data.
“For now, business activity is winning the tug of war with higher interest rates. That said, we expect this dynamic to shift in 1H’23, as the Fed continues its aggressive push to subdue inflation,” Crawford said.
