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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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Schneider now offers rail dray intermodal service

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Expanding its strength of intermodal expertise to include Rail Dray ensures that the carrier is continuing to meet the demands of a changing industry, a Schneider official said. (Courtesy: SCHNEIDER)

GREEN BAY, Wis. — Schneider, a provider of trucking, intermodal and logistics services, has added a new service to its lineup of intermodal solutions. Schneider Rail Dray focuses on the initial and end moves of intermodal transportation, getting freight from shipper to ramp and ramp to receiver — safely and seamlessly.

“Expanding our strength of intermodal expertise to include Rail Dray ensures that we’re continuing to meet the demands of a changing industry,” said Jim Filter, Schneider’s senior vice president and general manager of intermodal. “The new service provides capacity and control to reliably move dray freight without the inconveniences typically associated with rail moves.”

Schneider Rail Dray is optimal for:

  • Railroad providers needing to move shipper freight.
  • Third-party logistics providers lacking driver capacity.
  • Direct shippers using their own intermodal containers.

Filter said with one call, Schneider provides premium support and visibility needed for rail dray freight:

  • Scale: Conducting over 1 million drays a year, Schneider has the scale to expertly dray freight across an entire network.
  • Visibility: Satellite-tracking technology enables real-time visibility of dray freight and early notification of delays.
  • Risk Mitigation: Schneider’s professionally trained, uniformed drivers operate newer company equipment that is maintained to the highest standard to safeguard against delays and minimize safety and regulatory exposure.
  • Optimization: Schneider has the resources and know-how to efficiently optimize an entire dray network.

To learn more about how Schneider Rail Dray avoids costly hang-ups and keeps rail freight moving, visit Schneider.com.

Schneider’s services include regional and long-haul truckload, expedited, dedicated, bulk, intermodal, brokerage, warehousing, supply chain management and port logistics.

 

 

 

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ACT Research says freight markets still weak, data still trending negative

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This chart shows the net orders on a 12-month average versus the build rate. Only recently has the build rate been better than the order average. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — According to ACT Research’s (ACT) latest State of the Industry: Classes 5-8 Report, economic reports over the past month have more often risen above consensus than fallen below it, but it is premature to declare an end to freight market weakness.

“Data points indicating increased economic activity represent the essential first steps in the process of increasing demand to rebalance the heavy freight markets. However, as in any commodity market, it is not just demand, but supply, and until the supply-side of the market is addressed, the disequilibrium story will continue to weigh on freight rates and by extension the heavy vehicle industry,” said Kenny Vieth, ACT Research president and senior analyst. “While the data are starting to suggest ‘less bad,’ reports suggesting recovery are premature, as key freight metrics continues to trend negative in the latest round of data releases.”

Speaking about the Class 8 market, Vieth said that in concert with weak/deteriorating freight volumes and rates, forward-looking demand indicators continue to erode, even as mid and downstream data points remain robust.

“Ultimately, the current situation of weak orders and strong build is unsustainable,” he said.

Regarding the medium duty markets, Vieth said medium-duty demand metrics remain in better balance, but there are signs of modest fraying on weak net orders, relative build strength and excessive inventories.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Navistar to build new Class 6-8 manufacturing plant in San Antonio area

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Navistar’s new manufacturing plant will have the flexibility to build Class 6-8 vehicles, complementing the company’s existing assembly manufacturing footprint, which includes truck assembly plants in Springfield, Ohio, and Escobedo, Mexico. The plant will have the flexibility to build Class 6-8 trucks. Pictured is the International LT Series farm model. (Courtesy: NAVISTAR)

LISLE, Ill. — Navistar, a maker of commercial trucks and buses, said Thursday it will be making a capital investment of more than $250 million to build a new manufacturing facility in Texas.

The investment, which is contingent on finalization of various incentive packages, will bring approximately 600 jobs to the San Antonio area.

“Over the last five years, Navistar has made significant investments to improve our position in the market,” said Troy Clarke, Navistar chairman, president and chief executive officer. “This investment will create a benchmark assembly facility to improve quality, lower costs and provide capacity to support anticipated industry growth, as well as market share gains.”

The new manufacturing plant will have the flexibility to build Class 6-8 vehicles, complementing Navistar’s existing assembly manufacturing footprint, which includes truck assembly plants in Springfield, Ohio, and Escobedo, Mexico.

Navistar’s trucks are manufactured under the brand name International.

The announcement of the new Texas plant was part of Navistar’s Investor Day, where company executives presented their 2020-24 strategy “Navistar 4.0” that includes a plan to increase its EBITA margins to 12%.

Clarke said “Navistar 4.0” includes the following elements:

  • Improve EBITDA margins to 10% by 2022 and 12% by 2024.
  • Grow market share and become the number one choice of the customer through new product offerings and customer segmentation.
  • Implement a single platform strategy to optimize use of R&D resources and commonization of parts and tooling.
  • Increase modular design resulting in customer benefits, speed to market and lower product costs.
  • Build a new truck assembly facility in San Antonio, Texas, reducing logistics and manufacturing costs.
  • Use the TRATON alliance to provide significant procurement savings, more efficient research and development spend and new integrated power train offerings for customers.
  • Grow aftersales revenues with an expanding distribution network, growing private label sales and e-commerce initiatives.
  • Improve financial results allowing the company to invest in growth initiatives, de-lever the balance sheet and fully fund its defined benefit pension plans by 2025.

Building on the major advances achieved in the last five years, including gains from an alliance with TRATON Group, Navistar 4.0 lays out a clear path for the company’s ongoing transformation, Clarke said.

“Navistar is committed to building on the gains of the past five years to improve financial returns to shareholders,” he said. “Navistar 4.0 establishes a clear road map to grow EBITDA margins to 12%, while also winning in the marketplace.”

The new Texas investment builds on Navistar’s recently announced plans to invest $125 million in the Huntsville, Alabama, engine plant to produce next-generation, big-bore powertrains developed as part of the alliance with TRATON, a subsidiary of Volkswagen AG and a global commercial vehicle manufacturer worldwide.

The Texas site is located on a critical corridor along Interstate 35, which links Navistar’s southern United States and Mexico supply bases, allowing for significant logistic improvements, resulting in lower cost and enhanced profitability.

“This investment by Navistar is paramount to Texas’ success in growing our diverse and highly skilled manufacturing workforce,” said Texas Gov. Greg Abbott. “The Lone Star State is the new frontier in innovation, and I am confident that this partnership will usher in even greater economic prosperity for our state.”

“We are so proud to have a company like Navistar, a leader in vehicle innovation, in San Antonio,” said San Antonio Mayor Ron Nirenberg. “It shows that our strategy to grow our advanced manufacturing sector is working.”

“The county has, for many years, been touting the strength of our Texas-Mexico region as a platform for vehicle production,” said Judge Nelson Wolff. “Navistar’s decision to locate their newest facility here is just the latest affirmation that our community is uniquely situated to host world-class companies in advanced manufacturing industries. We are thrilled to have them in Bexar County.”

Navistar plans to break ground on the property later this year and anticipates production to begin approximately 24 months later.

In its presentation Thursday, Navistar also provided industry and company financial guidance for 2020, including:

  • Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be between 335,000 and 365,000 units.
  • Revenues are expected to be between $10.0 billion and $10.5 billion.
  • Adjusted EBITDA is expected to be $775 million to $825 million.
  • Manufacturing free cash flow is expected to be break-even excluding changes in working capital.

For more information, visit www.navistar.com.

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