Freight Truck Orders Plummeted 48% in January

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The Wall Street Journal / February 3, 2016

Orders reach second-lowest level since 2012 as trucking companies remain wary of weak industrial shipping demand

Orders for new big rigs plunged in January, as trucking companies eyeing weak shipping demand held back from investing in fleets.

Just 18,200 new trucks were ordered last month, down 48% from a year earlier and marking the second-lowest monthly total since 2012.

The data dashed equipment makers’ hopes that relatively strong December orders would carry over into the new year.

Instead, trucking companies are canceling expansion plans and postponing trade-ins for their older vehicles. They fear that new trucks will sit idle if lower-than-expected retail sales over the holidays and signs of contraction in the manufacturing sector translate into a sluggish freight market this year.

On Tuesday, USA Truck Inc., a truckload carrier based in Van Buren, Ark., said it operated nearly 400 fewer trucks in the fourth quarter compared with the previous year.

Knight Transportation Inc. said last week it would stop expanding its fleet, and Swift Transportation Co. , the largest truckload carrier, said in October it wouldn't add to the number of vehicles it operates.

U.S.-based truckmakers are expected to produce 250,000 new trucks this year, down over 20% from 2015. Production is likely to be only slightly higher than the number needed to replace older trucks leaving service, meaning few companies will expand their fleets.

Truck manufacturers have laid off workers and cut back production to match the decline in orders.

Last week, Paccar reported a 12% decline in fourth-quarter profits, which fell below analyst estimates.

Paccar expects sales to bounce back from recent lows as dealers have made progress in working through abnormally high inventories of unsold trucks.