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Trailer orders continue down swing, but trend not sign of problem

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ACT Research says year-to-date net orders through April were just over 80,000 units, down 37% from last year. (Courtesy: GREAT DANE))

The two major organizations that collect and analyze commercial vehicle data report that trailer orders remain subdued, but also indicate the lower numbers are not necessarily indicative of a problem.

ACT Research’s Frank Maly, director-CV transportation analysis and research, said that trailer industry net orders have eased meaningfully since November of 2018, as year-over-year-comparisons have now been in the red for the last five months, but that the order weakness is not indicative of fleets’ unwillingness to invest.

Don Ake, FTR vice president of commercial vehicles, said the low order level does not in any way reflect a softening of demand, but rather the fact that many large OEM’s have filled their order boards for 2019. Backlogs remain hefty, with robust production levels. Trailers orders for the past 12 months now total 364,000 units, he said.

“Year-to-date net orders through April were just over 80,000 units, down 37% from last year, but despite this, current orderboards still stretch to nearly year-end for the total industry,” Maly said. “Order weakness is more a symptom of OEM reticence to fully open 2020 orderboards than fleets’ unwillingness to invest, as we’re hearing of OEMs actively gathering ‘verbal commitments’ for the first half of 2020, with some orders reportedly being posted as ‘price pending’.”

Maly said softer new orders have been joined by higher cancellations in recent months, despite widespread implementation of cancellation penalties.

“However, trailer production continues at robust levels, with March of 2019 as the second highest production month in industry history,” he said. “ACT anticipates strong production levels through the remainder of this year, but see OEMs continuing to be challenged by component and material issues, as well as staffing.”

FTR reported preliminary trailer orders for April 2019 remained subdued for the second consecutive month coming in at 13,200 units, which is 40% below the same month in 2018.

“We expect the backlogs to remain very healthy, supporting continued high build rates,” Ake said. “Orders likely will stay at low volumes through the summer, or until OEMs open the 2020 order boards. OEMs have been cautious about taking longer-term orders due to uncertainty over future costs. Right now, the Chinese tariff situation is just adding to an already cloudy outlook.”

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ATA Truck Tonnage Index surges 6.6% in July, 7.3% higher than July 2018

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Compared with July 2018, the SA index surged 7.3%, the largest year-over-year gain since April. (Courtesy: AMERICAN TRUCKING ASSOCIATIONS

ARLINGTON, Va. — American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 6.6% in July after falling 1.2% in June. In July, the index equaled 122.7 (2015=100) compared with 115.1 in June.

“Tonnage in 2019 has been on a rollercoaster ride, plagued with large monthly swings, which continued in July as tonnage surged after falling significantly in May and June,” said ATA Chief Economist Bob Costello. “However, take out the month-to-month noise, and you see that truck tonnage is still on a nice upward path. It is important to note that ATA’s tonnage data is dominated by contract freight, which is performing significantly better than the plunge in spot market freight this year.”

June’s reading was revised down compared with our July press release.

Compared with July 2018, the SA index surged 7.3%, the largest year-over-year gain since April.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 122.8 in July, 4.5% above June level (117.5). In calculating the index, 100 represents 2015.

Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3% of total revenue earned by all transport modes.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s. This is a preliminary figure and subject to change in the final report issued around the 5th day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

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Average price of gallon of diesel drops below $3 for first time since February

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WASHINGTON — The average on-highway price of a gallon of diesel declined 1.7 cents a gallon to $2.994 for the week ending August 19, according to the Energy Information Administration of the Department of Energy.

It marked the first time since the week ending February 11, 2019, that the price has been below $3, and it marked the sixth consecutive week of a decline.

All regions of the country showed a drop led by a 2.5 cent a gallon decline in the New England states (Maine, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island) and a 2.4 cent a gallon drop in the Midwest states (North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Missouri, Iowa, Minnesota, Wisconsin, Illinois, Tennessee, Kentucky, Indiana, Ohio and Michigan). California declined 2.2 cents a gallon.

The price for the week ending August 19 was 21.3 cents a gallon for the comparable week in 2018.

For a complete list of prices by region for the past three weeks, click here.

For a list of the states by region, click here.

https://www.eia.gov/petroleum/gasdiesel/diesel_map.php

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July trailer sales up slightly, but below last year; used Class 8 sales fall again

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Both ACT Research and FTR reported trailer sales in July as being up slightly over June, but still far below the same month one year ago. (Courtesy: GREAT DANE)

The nation’s two organizations that track and analyze data about the commercial motor vehicle market both note that trailer orders were up in July as compared to June but were still far below when compared with the same month last year.

One of the two organizations reported used Class 8 sales fell for the fourth consecutive month.

ACT Research said preliminary estimate for July 2019 net trailer orders is 9,900 units. Final volume will be available later this month. This preliminary market estimate should be within +/- 3% of the final order tally.

FTR reported preliminary trailer orders for July at 9,000 units, up 61% from dismal June numbers but 68% below July 2018. FTR said trailer orders continue to show weakness during the summer months after experiencing a record run in the second half of last year, noting that van fleets already have their orders in for 2019 and have not started ordering yet for 2020. Although currently, production remains robust at near-record levels, some easing of build rates is expected as backlogs fall significantly to where they were at the start of 2018, FTR said. Trailer orders for the past 12 months now total 324,000 units.

“While net trailer order volume improved significantly from June’s dramatically disappointing results, the industry’s year-over-year performance continued to be extremely weak. While net orders jumped 65% versus an amazingly weak June, they were 66%  below this point last year, a tough comparison to the first month of the record-setting order run-up of last summer and fall,” said Frank Maly, ACT’s director of CV transportation analysis and research. “While some fleets made investment commitments in response to the opening of some 2020 order boards, their overall response was lackluster. A few months ago, there was strong interest to push commitments into next year, but uncertainty over the economy, freight volumes, and capacity has now caused many fleets to move to the sidelines as they re-assess their true needs for either replacement of older equipment or additions to fleet capacity next year.”

On a positive note, Maly said the cancellation pressures of recent months appeared to ease a bit in July. However, any cancels are likely impacting fourth quarter production slots, so there is still some churn in order board occurring before year-end.

“That results in a fairly soft foundation for early next year. Also worth noting is that production continued at a solid pace in July, although OEMs definitely slid back from June’s frantic pace,” he said.

Don Ake, FTR vice president of commercial vehicles, said trailer orders should stay subdued in August but start to revive in September, as fleets determine their needs for next year. The environment remains uncertain, with freight growth slowing and the tariff situation in flux.

“The July order volumes continue to demonstrate a possible return to normalcy in the equipment markets. The low total is representative of a typical slow summer order month, and is very close to the July 2016 number,” he said.

As for the used truck market, Steve Tam, ACT’s vice president of research, said preliminary used truck sales fell 2% month-over-month, the fourth consecutive sequential drop.

Other data released in ACT’s preliminary report included sequential comparisons for July 2019, which showed that average prices fell 4%, while average miles climbed 2%, and average age was up 4%.

“Used truck prices are the hottest topic in the industry right now,” Tam said. “Many dealers are experiencing significant softening in prices, but the erosion is not uniform. Depending on a host of factors, experiences vary and a few factors that impact prices include customer, equipment specifications, location, and vehicle condition.”

ACT’s Classes 3-8 Used Truck Report provides data on the average selling price, miles, and age based on a sample of industry data. In addition, the report provides the average selling price for top-selling Class 8 models for each of the major truck OEMs – Freightliner (Daimler); Kenworth and Peterbilt (Paccar); International (Navistar); and Volvo and Mack (Volvo).

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