INDIANAPOLIS, Ind. – Truck orders have been strong all year, but just how strong have they been? “Four of the top five order months ever have occurred this year,” said Don Ake, FTR vice-president of commercial vehicles, in an update on the commercial vehicle outlook presented at the FTR Transportation Conference. “It’s a very dynamic time, a very interesting time.”

Class 8 truck orders this year have consistently been above the 2011-2017 average, and are even significantly higher than 2015, which was a strong year for orders. But retail sales have lagged, not due to lack of interest, but because suppliers to truck OEMs have struggled to keep pace.

“We’ve had a clog in the supply chain, where we couldn’t build trucks fast enough,” Ake explained. “That’s been alleviated some in the last two months.”

He’s expecting retail sales to soon spike, as those trucks make their way to dealers and end users.

“The whole system is kind of clogged up,” Ake said. “Hopefully we’ve seen the worst (of the supply chain problems). What we can say at this point is, it was severe, and now it’s improved to just very bad. But they are still shipping more trucks out.”

That’s the good news. The better news is that it appears the strong orderboards enjoyed by most truck manufacturers are solid, with real orders and not just dealers buying stock and fleets staking out their spots, just in case.

Susan Alt, vice-president of policy for Volvo Trucks, said “This cycle seems different.”

She admitted during the last strong order year, many orders were being placed that were for dealer stock or were not real.

“We learned from that,” she said. “There’s real freight out there. We have a very long orderboard. If you need a truck, it’s going to be a while. The orderboard is solid and that’s what seems to be different. We disciplined dealers not to put in false orders or stock orders they’re not sure they have a customer for.”

This should eliminate any mass cancellations or a sudden correction.

“We’ve seen, not only are orders strong, prices are staying up, used truck prices are staying up, trucks are better built – it’s just a really good time in the industry right now,” said Alt.

But that doesn’t mean there aren’t risks. For Alt, those risks include bad government policies related to tariffs and trade, which are already having a small impact on prices.

“How much impact will it have? Right now, it’s not that big, but trade policies and import tariffs could start increasing prices of other things. We don’t know yet,” she said.

Class 8 truck backlogs are at a record high since a new counting system was put into place in 2000. Ake said capacity utilization is at 97%, which traditionally leads to more orders. But he said supplier issues may keep a lid on things.

“The near-term outlook is restrained by component availability,” he said. But FTR is projecting a strong finish to this year’s Class 8 truck production, and a “tremendous” 2019.

This year’s Class 8 production is expected to be 315,000 units, climbing to 340,000 units next year.

“In order to get there, suppliers have to supply,” Ake noted. If they can, he said next year’s 340,000-unit figure could be exceeded. Production will then fall to 280,000 units in 2020, 250,000 in 2021, and 245,000 units in 2022.

A recession in 2022 could reduce that number down to 167,000 units, reflecting a reduction in demand of about 78,000 trucks.

The trailer outlook is equally good. This year, FTR is projecting trailer build of 310,500 units – an 85,000 unit increase from its own projections in 2016. This is because of higher than expected GDP growth, industrial production, and truck loadings. There have been 13.5 million more loads this year than FTR expected.

Other trends are also contributing to the strong trailer demand, including a greater emphasis on drop-and-hook operations to keep drivers moving. As on the truck side, supplier issues have held back production.

“The supplier problem hit the trailer industry quicker, but not quite as hard,” Ake said, noting problems showed up around February but were largely ironed out by July. The main problem for trailer maker suppliers was finding workers in a low-unemployment environment, in which all sectors of the economy are booming.

In the trailer industry, steel and aluminum tariffs could have an effect on pricing.

“Tariffs on Chinese goods will impact shipments of wheel-ends and forged metal parts,” Ake said, adding manufacturers are also worried about tire availability.

But despite the challenges, trailers are flying off the shelf. Trailer build per day set a new all-time record in June. And trailer backlogs and orders are expected to set a new all-time high within the next few months. If FTR’s projection of 310,500 units built this year comes to fruition, it will be the best year ever, surpassing 1999.

Its projections for subsequent years are: 305,000 trailers in 2019; 285,000 in 2020; 270,000 in 2021; and 260,000 in 2022. Canada should see 20,300 trailer orders in 2019 and 19,900 in 2018.

What if there’s a recession in 2022? Ake said that could knock the 260,000 number down to 175,000, reflecting an 85,000-unit decrease in demand. And watch those order numbers carefully, he added.

“You should watch the trailer market for signs that the economy is slowing,” he said. “It’s a leading indicator. The trailer market will see this almost before anyone else will.”