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May North American Class 8 orders take a tumble

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May Class 8 orders were down a significant 70% from year-ago May. (Courtesy: DAIMLER TRUCKS NORTH AMERICA)

Preliminary North America Class 8 net order data released by the two commercial vehicle organizations that track information both show a sharp decline in Class 8 orders for May.

FTR reports preliminary Class 8 orders for May scraped the bottom of the order cycle, coming it a lowly 10,400 units, or 29% below the slow April activity.

This is the lowest volume for Class 8 orders since July 2016 and the weakest month of May since 2009, reflecting a minus 71% year-over-year comparison. Class 8 orders for the past 12 months now total 360,000 units.

ACT Research showed the OEM industry booked 10,800 units in May, dropping 27% from April, but down a more significant 70% from year-ago May.

FTR’s Don Ake, vice president of commercial vehicles said May 2019 is basically the final period for ordering trucks to be built in 2019 and the low numbers indicate that fleets are simply trying to find any scarce build slots left for the year.  Backlogs should fall to the 220,000 range, just where they were a year ago when the fervent ordering for 2019 began.

“May’s low orders were consistent with it being the last month in this year’s cycle. The 2019 order pattern was pulled ahead by three months, so May’s orders are similar to what you normally would see in August,” he said. “Ordering for 2020 is expected to begin in June, with several OEMs expected to start taking orders for next year.”

OEM build rates remain at robust levels, Ake said.

“The economy and freight growth are expected to ease throughout the year, applying some downward pressure on the truck market in the second half.  Orders for the next couple of months should be a good indicator of fleet confidence about 2020.”

“Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July 2016,” said Kenny Vieth, ACT’s president and senior analyst. “May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”

For more information on FTR visit ftrintel.com.

For more information on ACT Research, visit actresearch.net.

 

 

 

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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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