Big Rig Orders Plummet, Medium-Duty Remains Solid

BLOOMINGTON and COLUMBUS, IN – Two new and preliminary reports have been issued when it comes to new big-rig orders and no matter how you slice them they show huge drops while the smaller side of trucking continues at a good pace.

FTR’s preliminary data shows November 2015 North American Class 8 truck net orders at 16,475, 59 percent below a year ago and the lowest level since September 2012. 

This was the weakest November order activity since 2009 and was a major disappointment, coming in significantly below expectations, according to the freight forecasting firm. 

All of the OEMs, except one, experienced unusually low orders for the month. FTR expects orders to be better, but not necessarily good, the next two months. Orders for the last 12 months are now annualized at 300,000 units.  

“The November orders are very concerning. People were optimistic when orders held up well during the summer. Now we get into the peak order season and have the lowest orders of the year,” said Don Ake, FTR vice president of commercial vehicles. “The weak orders are the reason for the recent OEM announcements regarding production cutbacks and layoffs. Truck inventories are high and retail sales have stalled.”

He said the reason for the big decline is trucking appears to have enough new rigs for now. That’s because the manufacturing sector has sputtered and freight growth has slowed. 

He is forecasting orders should stabilize soon, but backlogs will be shrinking, necessitating larger production cuts than previously expected.

Meantime, a separate report from commercial vehicle industry data provider ACT Research pegs November orders just slightly higher at 16,600, but nearly 60 percent lower than a year ago, the same pattern as last month, when Class 8 orders were off 37 percent year-over-year.

“Unfortunately, little of the decline can be accounted for by seasonality,” said Steve Tam, ACT’s vice president, commercial vehicle sector. “November was the weakest Class 8 net order month since August 2010 on a seasonally adjusted basis and September 2012 on an actual basis. A glut of inventory in the broader economy has led to slowing freight and lower freight rates. This, in turn, has caused truckers to hit the pause button on truck orders.”

Turning to the medium-duty market, ACT said it managed to show solid performance, despite a slight decline in Classes 5-7 during November, with 18,700 unit orders.

“More prevalent direct exposure to facets of the economy other than those that generate freight has allowed demand for medium-duty vehicles to remain more stable,” said Tam. “Despite falling 15 percent month over month, the year-over-year and year-to-date comparisons reveal growth in the mid-single-digit percentage point range.”

Have your say

This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.