Sept. Truck Orders Jump 27.4% To Highest Since May, ACT Says

This story appears in the Oct. 14 print edition of Transport Topics.

New Class 8 truck orders climbed 27.4% in September from year-ago levels to 20,100, the highest total since May, according to preliminary figures from ACT Research.

That marked the eighth consecutive month of year-over-year growth in heavy-duty orders. The September total was also up 2.3% from August’s tally of 19,649.

ACT President Kenny Vieth said the report was a bit surprising because September historically is the second-weakest month of the year for orders.

“We’re still in third gear, and we’re running at maybe a slightly higher rpm,” he said. “We haven’t shifted from third to fourth gear at this point.”

Preliminary numbers from another research firm, FTR Associates, pegged North American Class 8 orders at 19,777 units in September, up 29% from a year ago and a 3% gain from August.

Although several factors have been driving fleets to place orders for replacement trucks, freight demand has not shown enough improvement for many to add capacity, Vieth said.

“The fleet’s old, the new trucks get good fuel economy, trucker profitability is solid . . . but the economy isn’t growing so fast as to really move the needle on the need for trucking services,” he said.

Vieth warned that the federal government shutdown and debt ceiling debate could put a damper on October orders.

“I think the longer this goes on, the more it becomes a drag on business confidence,” he said.

But he said he believes the current situation presents less of a potential threat than last year’s fiscal cliff debate, which “really helped push the market down” at the end of 2012.

Through three quarters, 2013 orders stand at 189,505, a 15.3% gain compared with 164,401 in the first nine months of 2012.

Truck manufacturers either declined to comment for this story or did not respond before Transport Topics’ deadline.

Navistar International Corp., however, announced last week that it recorded nearly 5,900 new orders for Classes 6-8 trucks in September, making it the company’s best month for order intake since December 2011.

Navistar’s market share dropped in recent years after its engine aftertreatment strategy failed to meet 2010 federal emissions standards.

The company since has transitioned to selective catalytic reduction for its heavy-duty trucks, utilizing engines from Cummins Inc. and its own MaxxForce engines with SCR aftertreatment.

Navistar also has added an SCR engine option — the Cummins ISB — for its medium-duty vehicles. Its total included more than 2,100 orders for these models.

For Class 8, Navistar estimated its orders share was 17.4% in September, up from 16.6% in August.

“For the last five months, we have seen a positive trend in orders, driven by our new product launches and quality improvements,” said Bill Kozek, president of Navistar’s North American truck and parts business.

David Leiker, an analyst for Robert W. Baird & Co., described overall Class 8 order intake as “generally stable.”

Citing a “muted” freight environment and cost and margin pressures for truckload carriers, Leiker predicted that the Class 8 market will continue at replacement-only levels before freight acceleration drives better utilization and pricing.

Jefferies & Co. analyst Stephen Volkmann said September orders were “toward the upper end of our expectations.”

Vieth said truck makers’ backlogs at the end of August represented about 3.8 months of production, based on current build rates. That was up from 3.3 months at the end of July, but that gain was due largely to slower rate of production in August, he said.

“It’s been a very good year in terms of balance within the industry,” Vieth said. “Orders have been at the right level for production.”