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‘Extraordinary market conditions’—Class 8 orders drop again in March

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According to the latest preliminary numbers from both ACT Research Co. and FTR, Class 8 orders dropped again in March as the trucking backlog continues.

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Preliminary North America Class 8 net order data show the industry booked 15,700 units in March, dropping a moderate 6.7% from February, but down 66% from year-ago March.

“March marks the fourth consecutive month of orders meaningfully below the current rate of build,” said Steve Tam, ACT’s vice president. “Even though demand is a shadow of its former self, slowing order intake belies current conditions. Admittedly, economic and freight growth are slowing, but both are still growing. And in the context of retreat from record levels, it is no wonder truck buyers continue to pursue incremental profits, as evidenced by the number of unbuilt units in the backlog.”

FTR reports that preliminary North American Class 8 orders for March came in at 15,200 units, remaining below the 20,000 threshold for the third consecutive month. March 2019 was the lowest March for orders since 2010. March orders were 8% below February and down 67% year-over-year Class 8 orders for the past 12 months have now totaled 397,000 units.

Demand is still strong, but supply is limited with all of the choice build slots for 2019 filled, FTR noted. Fleets that need trucks are basically taking whatever is available. Backlogs are rapidly declining, as the market tries to rebalance and establish some semblance of normality.

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“These are extraordinary market conditions,” said Don Ake, FTR vice president of commercial vehicles. “Most fleets ordered well in advance of their need for trucks in 2019. OEM production slots were scarce in 2018 and supplier constraints caused disruptions in supply, so fleets didn’t want to get shutout this year. Now so many build slots have been reserved, fleets that are currently placing orders for delivery this year don’t have many options.

“Even though the economy and freight growth appear to be slowing, it has not impacted OEM line rates as of yet,” he continued. “Fleets are still putting more trucks in service and competing in a still decent freight market. It is expected that Class 8 sales will moderate sometime before the end of the year, as industry capacity begins to catch up with the freight surge that began in 2018.”

Medium-duty orders, meanwhile, declined in March according to ACT.

“Classes 5-7 orders took their first respite in more than a year, falling to the 20,000-unit mark in March,” said Tam. “Regardless of the time period comparison, March orders declined, coming in 23% below February and 32% lower than March 2018.”

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