Orders for Heavy-Duty Trucks Rise in July

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The Wall Street Journal  /  August 3, 2017

North American fleet owners ordered more big rigs used for long hauls

Trucking companies stepped up orders for new big rigs in July for the second consecutive month, signaling optimism that the freight market is recovering from last year’s prolonged downturn.

Last month, North American fleet owners ordered 18,300 Class 8 trucks, the heavy-duty vehicles used for long hauls, a 5% increase from June and 79% more than the same month during a depressed period for orders last year, according to preliminary numbers from FTR, a freight transportation research firm.

Commercial truck orders tend to slow down in the summer, bottoming out in July before picking back up in October, when large carriers typically make plans to expand fleets or replace older units.

This year’s early uptick bodes well for the fourth quarter, when truck orders are expected to accelerate, paving the way for increased demand in 2018, said Don Ake, FTR’s vice president of commercial vehicles.

“Freight is growing at a stronger pace than it was last year,” Mr. Ake said.

Cargo volumes at U.S. seaports were up in June, buoyed by surging imports at the start of the shipping industry’s peak season for demand. U.S. manufacturing activity expanded in July for the 11th month in a year, and unemployment remains low.

Cummins this week upgraded its earnings forecast for the year in part because of what it said was stronger orders in North America.

Trucking firms that pared back their fleets when demand was weak appear to be reversing course. Capacity is expected to shrink further at the end of the year, when truckers will be required to electronically record their hours behind the wheel.

Other factors bolstering orders this year: a rollout of more fuel-efficient trucks in late 2016, as well as a rebound in commodity prices, said another analyst. “There’s probably twice as many heavy trucks operating in the oil patch as there were a year ago,” he said.

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Class 8 orders continue to roll

Fleet Owner  /  August 3, 2017

Medium-duty truck orders dipped in July, though they remain up year-over-year.

Class 8 net orders remained strong in July, while medium-duty truck orders took a significant mid-summer dip, though order levels remain higher compared to 2016.

Class 8 orders increased 4% in July versus June this year and are up 81% year-over-year.

“While down on a nominal basis from the 2017 order trend, seasonal adjustment brings July’s order intake in-line with recent activity," one analyst said. "Over the past six-months, Class 8 net orders, seasonally adjusted, have averaged 21,900 units per month."

According to data from FTR Transportation Intelligence, Class 8 net orders for July hit 18,300 units; a month-over-month improvement of 5% and 79% better than the same month one year ago. Orders increased for the second month in a row, a positive sign during the summer, with order volume over the past 12 months indicating an annual Class 8 production total of 224,000 units.

“This is a great sign to see orders rising, even slightly, in mid-summer,” noted Don Ake, FTR’s vice president of commercial vehicles, in a statement. “This is the beginning of a positive trend that we expect to continue the rest of this year, right into 2018. Freight is on the upswing and industry capacity is tightening. The equipment markets, both Class 8 and trailer, are starting to respond to this environment.”

By contrast, North American Class 5-7 medium-duty orders dropped 26% in July versus June, though they remain 2% higher on a year-over-year basis. After a seven-month stretch of Class 5-7 net orders averaging 22,100 units per month, preliminary orders dropped in July, declining to a 13-month low.

Still, taken together, even though heavy- and medium-duty orders were lower month-over-month based on July’s numbers as a group, they are up a combined 33% from last year, which highlights the significant improvement in demand that has occurred over the past twelve months.

Truck OEMs themselves remain confident regarding the current commercial truck order and sales trends as well.

Paccar, for example, noted in its second quarter earnings report that U.S. and Canada Class 8 orders increased 44% in the first six months of 2017 compared to the same period last year.

“Kenworth and Peterbilt’s medium- and heavy-duty truck deliveries increased in the second quarter of 2017 by 25% compared to the first quarter of this year,” said Gary Moore, Paccar’s executive vice president, in that report. “Class 8 truck industry retail sales for the U.S. and Canada are expected to be in a range of 200,000 to 220,000 vehicles in 2017. The truck market reflects the good economy and high levels of freight tonnage.”

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Class 8 Orders Steamroll Year-Over-Year, Up 81% to Surpass 18,000

Transport Topics  /  August 8, 2017

North American Class 8 orders blasted through normal expectations in July, climbing 81% year-over-year in what is typically the slowest order month of the year.

Orders hit 18,700, according to preliminary data.

A year earlier, orders only reached 10,358. July 2016 recorded the weakest monthly order intake since February 2010.

“The year-over-year story is not so much about what happened this year as it is about what didn’t happen last year,” one analyst said.

July 2016 also was the bottom of the cycle in this market, he said. “Since then, you can chalk [the gains] up to pre- and post-election sentiment.”

But as far as the industry having a consensus of where the market is right now, he’s not sure. “I think there is quite a bit of opacity, given the lack of concrete drivers, basically. And I think that is true even among the truck makers.”

July’s Class 8 North American preliminary net orders of 18,700 equates to a seasonally adjusted annual rate of 263,700; replacement for the same market is 225,000.

The research firm FTR pegged preliminary Class 8 orders at 18,300.

“This is a great sign to see orders rising, even slightly [month-over-month, up from 17,600 in June], in mid-summer. This is the beginning of a positive trend that we expect to continue the rest of this year, right into 2018. The Class 8 market is starting to move upward and orders are forecasted to accelerate in the fall,” Don Ake, Vice President of Commercial Vehicles at FTR, commented in a statement.

“Freight is on the upswing and industry capacity is tightening,” he said.

Orders for the past 12 months total 224,000 units, according to FTR.

As with the several previous months, “the strength was largely broad-based across [truck makers] with orders being propelled by small and medium fleets and it appears that some incentivization is taking place in the marketplace,” analyst Jamie Cook of Credit Suisse wrote in a note to investors.

Tam mentioned the experience of the owner of a 200-truck fleet in Indiana who told him she is being offered big-fleet pricing discounts and couldn’t walk away from such a good deal, even if it was ahead of her normal trade cycle.

“The concern from an outside industry observer’s perspective,” Tam said, “is that if you are pulling forward demand, at what point do you have to start paying back?”

He wondered if the Indiana fleet made a permanent change to its acquisition cycle, or if it did not get the same discounts next time, would it hold off?

“Now you are stretched out on the back end,” Tam said.

One truck maker said incentives are the rule.

“Every single deal is competitive. Every truck maker is on every deal, it appears,” Jeff Sass, Senior Vice President, North America Truck Sales and Marketing at Navistar International Corp., told TT. “It’s not as if anyone has decided they are going to go off and make a lot of margin on the trucks. They are all really skinny deals out there.”

Navistar is the parent company of the International Truck brand.

Lead times at International are out to eight weeks, Sass said, and its dealers are trying to make sure they get their orders submitted in time to get into the fiscal year, which for Navistar ends Oct. 31, since a lot of them follow the same fiscal calendar.

At the same time, most of the mega fleets are done for 2017, Sass said. “Their trucks are on order, or have already been placed. We are starting the conversation for the 2018 buys right now.”

Another analyst noted orders will be increasingly important going forward to fill up still-open production slots this year.

Based on truck makers’ build plans in July to produce 22,000 units — or a 270,000 annual build rate — “that would imply backlog-to-build levels of 4.4 months, reaching a three-year low and suggesting that monthly orders will be increasingly important in determining quarterly production beyond the third quarter, particularly given the fourth quarter schedule is 61% open as of last month, versus normal of 54%,” David Leiker an analyst with Robert W. Baird & Co., wrote in a note to investors Aug. 3.

Tam agreed, saying all truck makers were likely already into the fourth quarter with their respective production schedules, “but to varying degrees.”

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[james j neiweem]

Is the MHD a class 7 or 8. How are sales.

[kscarbel2]

 

Is the MHD a class 7 or 8. How are sales.

Class 7 or 8, depending on how it's spec'd.

It remains a mystery to Mack brand dealers why Volvo doesn't offer the 220 to 330 horsepower Volvo D8 (rebadged UD GH8E) in the Granite MHD so they might attempt to be competitive once more in the municipal segment.

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Class 8 Truck Production Increased in July

Heavy Duty Trucking  /  August 20, 2017

North American Class 8 and medium-duty vehicle production increased in the month of July, boosted by strong order numbers.

“After cutting 3,000 units from the Class 8 build plan last month, the OEMs added back nearly 6,000 units in July,” said one analyst. “This brings the OEMs’ full-year expectations to over 252,000 units.”

Despite a lower build rate in July compared to earlier months, the medium-duty Class 5-7 truck market saw 15% greater production for the month.

“With orders below build, the medium-duty backlog declined to about 54,000 units of unbuilt vehicles,” he said. “Similarly, medium-duty inventories declined as July retail sales outpaced production.”