Class 8 Orders Skyrocket

This story appears in the Nov. 10 print edition of Transport Topics.

New Class 8 truck orders skyrocketed in October to 46,200 units, the second-highest level recorded, as large fleets locked in 2015 build slots, ACT Research reported.

Last month’s supersize total represented a 76.5% spike from the 26,178 orders placed in October 2013. On a sequential basis, the latest tally leaped 86% from September’s 24,842 orders.

The only larger monthly total on record came during the height of the 2006 pre-buy event, when orders peaked at 52,194 units in March of that year. Fleets bought a record number of new trucks ahead of the tighter federal emissions standards that went into effect in 2007.

In contrast, last month’s historic order level was driven by the strength of the current freight market, said Kenny Vieth, ACT’s president and senior analyst.

“The economy is growing in a lot of the right spots for freight,” he said. “Freight rates are rising, trucker profitability is rising, and also, the [original equipment manufacturers] are delivering great value with the fuel economy of today’s trucks.”

The October total boosts 2014’s cumulative North American net order total to 295,458 units, a 37.6% gain from the 214,765 orders in the first 10 months of 2013, according to ACT.

With two months to go, this year’s order intake has already surpassed the 267,700 orders placed in all of 2013. If order levels remain strong in November and December, 2014 would be the industry’s best year for new orders since 2004, ACT said.

During October, many large fleets placed orders for trucks to be built throughout 2015, Vieth said. Those orders appear to represent “true demand” for new trucks, rather than speculative “placeholders.”

At the same time, small and midsize fleets moved forward with plans to replace their aging equipment, he added.

Meanwhile, research firm FTR reported a “phenomenal” Class 8 net order total of 45,795 for October, up 87% from September and a 76% leap from a year earlier.

“The huge amount of orders was driven by several very large fleets placing orders to be built throughout 2015,” FTR Vice President Don Ake said. “This is the result of the industry operating near full capacity and fleets having confidence that freight growth will remain strong for the entire year in 2015. They want to lock in their orders now to guarantee future deliveries.”

Daimler Trucks North America, which builds Freightliner and Western Star trucks, said its order intake for Classes 6-8 trucks was 31,304 in October, the highest total in the company’s history.

DTNA said it captured a 51.9% share of the industry’s 60,307 total orders for those vehicle classes, based on ACT’s data. For Class 8 only, DTNA received 26,116 orders during the month, representing 56.5% market share.

“The number of incoming orders generated by Daimler Trucks North America in October demonstrates that our strategy is effective and that our vehicles provide customers with tangible benefits,” Wolfgang Bernhard, head of Daimler’s global truck and bus unit, said in a company statement.

DTNA CEO Martin Daum said customers’ focus on total cost of ownership has driven sales of its Cascadia Evolution model, while also boosting the company’s entire product portfolio.

The company has not announced a production increase in light of the record order intake but said it is sold out for the remainder of 2014.

Magnus Koeck, vice president of marketing and brand management at Volvo Trucks, said the order growth has been driven “principally by replacement needs and some fleet expansion to address record freight demand and tight capacity.”

He added: “Consumers and businesses continue to gain confidence in the economy as demonstrated by strong job growth and increased manufacturing activity.”

John Walsh, vice president of marketing at Mack Trucks, said, “The primary drivers of October’s orders are the ongoing need of customers to replace aging vehicles, as well as the strength of the current freight environment, leading some fleets to expand.”

Other manufacturers declined to comment or did not respond by Transport Topics’ deadline.

ACT’s Vieth said truck makers likely added about 16,000 units to their backlogs in October, pushing the backlog total to about 135,000.

That compares with a backlog of just 78,700 at the same time last year, he said.

“Although October normally starts the busy order season, these numbers are exceptionally strong nonetheless as fleets secured production space in 2015,” analyst Rhem Wood of BB&T Capital Markets said in an investors note. “Clearly the order strength indicates broad-based demand among small, medium and large fleets, as well as likely solid volumes among all OEMs.”

R.W. Baird analyst David Leiker said October orders “far surpassed” expectations, while Ann Duignan of J.P. Morgan Securities predicted the strength will continue.

“With oil prices continuing to fall, fleets are likely to continue to replace equipment at a healthy pace and freight volumes should remain solid on consumer spending,” she said.