FTR and ACT Research have both released their preliminary estimates of class 1 truck orders in October. Here are the highlights:
FTR reported orders of 43,000 units, up 19% from a year ago. Maybe more importantly, that total was up from the 42,300 units in September. September orders had dropped off fairly significantly from 52,400 units in August, and any concerns that it was the start of a decline have been assuaged at least for one month. “Freight volumes are now expected to be healthy well into the second half of 2019, keeping capacity utilization at extremely tight levels for an extended period,” FTR said in its prepared statement.
ACT clocked in a bit higher, with 43,600 units ordered, up 1.9% from September. As a reflection of just how strong the market is, ACT said the September numbers were up “only” 21% from October 2017, a hefty increase in almost any year but as ACT pointed out, a fraction of the 181% increase between August 2017 and August 2018. But that sort of lower comparison is what trucking executives have been warning about for several months across the board: the bull market in all segments of trucking began last September, so year-on-year comparisons are not going to look as lofty as they have been. “October marks the one-year anniversary of the beginning of the current cyclical surge for Class 8 orders, making year-over-year comparisons narrow appreciably,” Kenny Vieth, ACT’s president and senior analyst said in his company’s prepared statement.
The monthly releases by FTR and ACT recently have a problem: how do you say something new about how strong the market is? Here’s what Don Ake, FTR’s vice president of commercial vehicles, said: “October is traditionally the start of the next year’s order season, so to see strong numbers now is not surprising. But ordering for 2019 began in July with back-to-back record months. For orders to still be this hefty in October after that is remarkable. Fleets want to make sure they have access to new trucks, as the growing economy continues to stretch capacity. They continue to place a record number of orders to ensure they will have the trucks needed if freight levels keep growing.“
Ake also noted that prior to 2018, there had only been five instances of months when the order book exceeded 40,000 vehicles. That benchmark has been surpassed eight times this year, according to Ake. But he also said going forward, there may be slippage as OEMs don’t have the slots to meet demand, because they’ve already been filled.
ACT also provided data on medium duty trucks. In October, “activity (dipped) modestly below short and long-run averages.” In the prior six months, average build rates were 24,000, and the 12-month figure was 24,900. The preliminary orders for class 5-7 trucks were up 19% year-on-year, but were down 4.9% from September, ACT said.