New truck orders and backlogs have peaked; what now?
That’s precisely the question FTR is trying to answer. FTR, a company that uses analytics and history to project the future of the transportation market, held a recent seminar to discuss the future of the truck and trailer industry. Taking a look at the market trends, FTR believes that things should go smoothly in the industry over the next year, but they will have their eyes on some trends.
“Our outlook is not negative, but there are some trends that need to be watched,” says Don Ake, vice president of commercial vehicles for FTR.
Industrial production has been weak thus far. FTR expects it to recover, but nonetheless be lower than last year.
The recent decline of durable good orders is “concerning,” Ake adds. “There is either too much inventory or too few sales. Probably a little of both. But we are forecasting a rebound.”
Trailer orders rebounded in June from 15,000 units to 25,000. Backlogs are still very high, Class 8 truck orders remain healthy and trailer production has nearly hit an all-time high.
“The million dollar question,” says Eric Starks, FTR president, “is how long can this be sustained? We say, it should last for a good period of time.
“We believe that we are at peak production at this time. Things will start pulling back around second quarter of next year–almost a full year from now,” Stark continues. “And even then it’s more of a measured pullback rather than a drop-off. The last thing we would want is a dramatic drop-off; luckily, we don’t expect that to happen.”
Starks points out some risks to look out for over the coming months in terms of truck sales: overshooting the market is a likely concern in 2016 and 2017; the industrial sector is declining; and accelerated replacement is having an impact on the market. These are some concerns that FTR will have their eye on in the next year.
In terms of medium-duty sales, activity is “humming along,” according to Starks. “Production is accelerating faster than sales, which could lead to oversupply. Overall, we can expect growth, but not substantial growth.”
Overall, FTR’s projections are largely positive, with the caveat that some trends bear watching. Anyone interested in more detailed projections or reports should visit the company’s website. And don’t miss our Market Data news hub by clicking here.