Business

BLOOMINGTON, Ind. — North American Class 8 tractor orders saw elevated numbers in October. FTR reports preliminary North American Class 8 net orders for October remained elevated for the second consecutive month, coming in at 43,200 units. October order activity was -23% month-over-month and +77% year-over year, with Class 8 orders now totaling 271,000 units for the last 12 months. ACT Research’s preliminary North American Class 8 net order report for October showed a slightly lower number at 42,500 units. “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,” according to FTR. Charles Roth, commercial vehicle analyst for FTR, said that “OEMs are now filling build slots well into Q2 and the early part of Q3 2023. 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.” Roth said October was the turning point for the Class 8 market. “While we face headwinds in the freight market, overall fleet sentiment remains optimistic,” he said. “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.” Roth added that with two extremely strong months of net orders, there is the potential for a gradual decrease month over month in net orders at the close of the year. According to ACT, strength in orders reflects: OEMs having opened their order boards for 2023 more broadly. Ongoing pent-up demand, with tailwinds from strong carrier profitability and elevated fleet age proving resilient. “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 (2023 barring any unforeseen cataclysmic events),” Eric Crawford, ACT vice president and senior analyst, said. “Manufacturer demand was solid, albeit against somewhat challenging comps. Over the past 12 months, the manufacturer demand has seen 234,200 orders booked.”

Data from Truckstop and FTR Transportation Intelligence for the week ending Oct. 28 showed little overall change in spot market rates or volume. However, individual regions and segments saw notable changes. Flatbed and refrigerated spot rates saw only marginal declines, but the dry van segment saw its largest drop in broker-posted rates in seven weeks. Still, anaylists say, the decline was not “especially large.” Spot load activity increased 2% after a 2.5% gain in the previous week. Volume was about 47% below the same week in 2021 and nearly 2% below the five-year average. The West Coast led gains, and load activity went up in the Southeast and South Central regions, which offset declines elsewhere. Truck availability ticked up 0.6%, and the Market Demand Index — the ratio of loads to trucks — rose slightly after falling to its lowest level since May 2020 the previous week. The modest overall increase in spot load activity masks some variations at the regional level as the West Coast led gains with week-over-week growth of nearly 12%. The gains on the West Coast were uniformly strong, ranging from 10% for dry van to more than 19% for flatbed. Dry van spot rates fell nearly 5 cents, which is the largest drop in seven weeks. Rates were 26% lower than the same week in 2021 and nearly 2% below the five-year average for the week. FTR estimated that dry van rates excluding a fuel surcharge were more than 42% lower than in the same week in 2021. Dry van loads increased 2.9% after easing 1% in the prior week. The largest gains were in the South Central and Southeast regions while volume was down in the Northeast and Mountain Central regions. Dry van volume was about 48% below the same week in 2021 but almost 1% above the five-year average for the week. Refrigerated spot rates decreased nearly 2 cents after rising just more than a cent in the previous week. Rates were nearly 20% below the same week in 2021 but almost 7% above the five-year average for the week. Rates excluding fuel surcharges were nearly 33% below the same week in 2021. Refrigerated loads ticked up 1.3%. Sharp gains on the West Coast and in the Southeast and South Central regions were offset by weakness elsewhere, especially in the Northeast. Refrigerated volume was almost 52% below the same week in 2021 and nearly 2% below the five-year average. Flatbed spot rates eased three-tenths of a cent after falling 5.5 cents in the week before. Rates were nearly 7% below the same week in 2021 but more than 16% above the five-year average for the week. Excluding an imputed surcharge, flatbed rates were more than 19% below the same week in 2021. Flatbed loads edged up 1.2% after rising 8.5% during the previous week. Load activity was up sharply on the West Coast, offsetting weaker performance elsewhere. Flatbed volume was 52% below the same week in 2021 and 14% below the five-year average for the week. With the increase in truck postings not quite matching the gain in volume, the Market Demand Index ticked up slightly to 49.1 from the prior week, which had seen the lowest MDI since May 2020.

COLUMBUS, IN – ACT Research reported in its Commercial Vehicle Dealer Digest slightly lowered forecasts due to the Fed’s continued action toward inflation, disproportionally impacting the freight economy. “ACT’s forecasts into the medium term move incrementally lower this month on the continued deterioration of economic expectations: Inflation looks more stubborn and the Federal Reserve’s increasingly resolute rhetoric shows a willingness to do whatever is required to bring inflation to long-term targets of around 2%,” Kenny Vieth, ACT’s president and senior analyst, said. “On the freight economy.” He said that for an industry that relies on the manufacturing and distribution of goods, changes to economic expectations are even more impactful to the freight economy: ACT’s freight composite drops as rates sensitive economic sectors (durables, investment, housing) are disproportionally impacted. “Spot rates continued to edge lower in September. ACT’s aggregation of DAT’s rate data showed slight sequential deterioration in spot freight rates on an absolute as well as seasonally adjusted (SA) basis,” Vieth said. “September spot rates averaged $1.96 net fuel, down 3% from August, while the SA spot rate declined 4.0%. Anecdotes indicate that contract rate negotiations are running south of -10%.”  

BOISE, Idaho — Moderating economic activity and normalizing supply chains have reduced the need for capacity and are driving the outlook for rates and demand lower, leaving higher cost carriers worried about turning a profit in the coming months, according to the latest Bloomberg Intelligence | Truckstop survey of owner operators. “Sentiment among survey respondents in the spot truckload market has turned significantly more bearish, according to survey respondents, about the prospects for demand and rates growth,” Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence, said. “Current spot conditions may likely force a rebalancing, forcing higher-cost carriers to reassess their operations.” The Bloomberg | Truckstop 3Q22 Truckload Survey shows: Pessimism among carriers has touched the pandemic lows seen in 1Q20: About 33% of respondents expect load growth to decline over the next six months, the lowest reading since 1Q20 and significantly higher than 3Q21 at 9%. Many carriers raised concerns over the strength of the upcoming peak season. Refrigerator carriers were the most optimistic, with only 10% of those surveyed projecting a volume decline in the coming months. Spot rates decline, impacting carrier sentiment: Spot rates excluding fuel surcharges have fallen 31% since peaking in late December, which has negatively impacted carrier sentiment. Only 26% of carriers expect the rates to rise in the next six months, the lowest level since 1Q20. About 38% of carriers expect a drop over the next 3-6 months. Total demand has taken a turn downward in 3Q: 74% of respondents noticed a drop from 2Q and about 57% said volume growth was down from a year earlier. The typical carrier reported an average decline of 30% in the number of loads available which is in line with the 37% drop in Truckstop’s Spot Market Demand Index. “The most important thing to Truckstop is that we continue to provide the tools and resources our customers need to keep their businesses moving forward, regardless of market conditions,” Kendra Tucker, chief executive officer at Truckstop, said. “Our platform and solutions help carriers perform the critical day-to-day functions needed to help ensure they can weather these types of market fluctuations and remain profitable.” The Bloomberg | Truckstop survey of owner-operators and small fleets provides timely channel checks into the health of the spot market. The sample size was 128, consists of dry-van, flatbed, temperature-controlled and specialized/diversified carriers. Of the respondents, 64% operate just one tractor. The complete survey is available to Bloomberg Terminal subscribers via BI.

COLUMBUS, Ind. – Used Class 8 retail tractor volumes (same dealer sales) were down 12% month over month, according to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research. This is a larger drop than the 9% decline that ACT saw in its preliminary data for last month. Average miles were up 2%, with average price and age both down 3%, month-over-month. Longer term, the average price for used tractors was higher year-over-year and year-to-date, as were average miles, with price up 20% year-to-date in September, average miles 3% higher compared to the first nine months of 2021 and average age down 1% for the same period. The report from ACT 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). This report is utilized by those throughout the industry, including commercial vehicle dealers, to gain a better understanding of the used truck market, especially as it relates to changes in near-term performance. “Same dealer retail sales of used Class 8 trucks fell in September, shedding 12% m/m,” Steve Tam, vice president at ACT Research, said. “Used truck sales typically see a small decline in September, relative to August, but this drop exceeded expectations. As has been the case for the past several months, looking back at new truck production in the recent past has provided some meaningful insight into where used truck sales volumes may be headed in the near term.” Tam added that while July’s output lagged, it did not portend the magnitude of the pull back the used truck market eventually experienced in September. “That suggests in addition to supply, demand factors may have been at work,” Tam said. “That should not come as a surprise to anyone in the industry. Tam said it is worth noting is total used truck sales for September were 16% higher month-over-month. “This is due to outsized auction activity (104% month-over-month), which is not unusual at quarter end,” Tam said. “Rounding out the channels, wholesale transactions were 18% lower in September, relative to August, as dealers remain cautious about building inventory. Developments in the freight and freight rates market, and in particular the spot markets rather than the contract market, remain the best near-term indicator of not only used truck volumes, but also values.”  

BRENTWOOD, Tenn. — The two most mentioned concerns among professional truck drivers continue to be equipment and compensation. This is according to the latest data from data aggregator PDA. On Oct. 20, PDA officials compiled their most recent data from thousands of phone calls with professional truck drivers during the third quarter of 2022. The data was gathered as part of PDA’s efforts to help trucking companies curb turnover while providing accurate and actionable data for addressing their drivers’ concerns, according to a news release. In addition to concerns about equipment and overall compensation, miles-related compensation issues continued to rise due to the softening freight market. “While equipment concerns remain the top issue for drivers in Q3, PDA continues to see a shift in data connected to miles-related compensation issues,” Scott Dismuke, PDA’s vice president of operations, said. “Drivers’ concerns about miles continue to increase, up 12% since Q1, a clear indication of a slowing freight market.  In September alone, over half the drivers complaining about pay cited miles as the main reason.” Dismuke noted that the slowing freight market is not only increasing driver frustration with miles, but also causing a climb in turnover rates. “PDA has seen an uptick in turnover that began at the end of Q2 and continued in Q3,” Dismuke said. “For those drivers who have entered the market in the last two years, the slowing freight market is proving to be a frustrating wake up call. For veteran drivers who have enjoyed consistent freight over the last couple of years, the slowing freight market is a disappointing return to waiting longer for freight.” From a percentage standpoint, overall equipment issues dropped for the third quarter in a row, and mechanical/breakdown issues were also down from Q2 to Q3. Dismuke said that while the percentage of complaints has dropped, the number of drivers complaining about equipment has remained the same. “Equipment issues remained the top driver concern in Q3.” Dismuke said. “While the percentage has dropped nearly 5% from Q1, relative to other categories, the total number of complaints remained the same. So while we are hearing the equipment and parts shortage is letting up, the numbers aren’t yet reflecting that.” Dismuke remarked that the softening freight market will continue to be a challenge in combating turnover in Q4. “People are spending more on services right now, less on goods,” Dismuke said. “Diesel/gas prices are on the rise again, taking disposable income out of people’s pockets, interest rates continue to rise and some economists are expecting unemployment rates to go up; meaning the last quarter of 2022 could continue to be a challenge in reducing driver turnover.” Driver retention continues to be more important now than it has ever been. Reducing turnover and keeping drivers in trucks will continue to be a challenge. “Drivers who have entered the market in the last two years have not experienced a slowdown in freight,” Dismuke said. “Open and proactive communication with drivers will be essential in Q4, especially with new drivers who are struggling with miles in this market.” To see PDA’s full Q3 Data Download, click here.  

SAN DIEGO — The American Trucking Associations’ (ATA) Board of Directors has elected Dan Van Alstine, president and COO of Des Moines, Iowa-based Ruan Transportation Management Systems, as the Federation’s 78th chairman. “I am humbled and truly honored to be here and to serve as your chairman of this great organization,” Van Alstine said. “It is an absolute privilege to represent the millions of Americans who move our country as part of the transportation and logistics industry.” Van Alstine succeeds Harold Sumerford Jr., CEO of Birmingham, Alabama-based J&M Tank Lines. “Dan is perfectly suited to be ATA’s next chairman. He listens, asks questions and then takes action – that’s leadership,” ATA President and CEO Chris Spear said. “His ability to get the best out of people by challenging and inspiring them is why he makes a difference, and we are fortunate to have him as our chairman.” Sumerford said: “I want to wish my friend and colleague Dan good luck as he starts this journey, which promises to be a truly special one. I also want to thank my fellow ATA members and the ATA staff for their support this past year, I could not have asked for a better year as chairman.” The Board also elected Andrew Boyle, co-president of Boyle Transportation, Billerica, Massachusetts, as ATA first vice chairman and, Darren Hawkins, CEO of Yellow, Overland Park, Kansas, as ATA second vice chairman. In addition, the Board named Dennis Dellinger, president and CEO of Cargo Transporters, Hickory, North Carolina, and Wes Davis, CFO of Big M Transportation, Blue Mountain, Mississippi, as ATA vice chairmen. In addition, the Board re-elected John M. Smith, chairman of CRST International Holdings LLC, as secretary and John A. Smith, president and CEO of FedEx Ground, as treasurer.