Positive Economy Means Good News for Truck, Trailer Orders

by Michael Brown

COLUMBUS, IN — The remainder of 2013 looks to be a good one for truck and trailer orders, as well as the industry as a whole, according to Kenny Vieth, president and partner of truck market researchers ACT Research.

Vieth notes how consistent North American class 8 orders have been in 2013, so far. “If we look at the first five months of 2013, the worst month has been 22,000 and the best month has been 23,300,” he says.

In April, class 8 orders were up 36 percent year-over-year and Vieth says that May also saw significant increases — up about 30 percent year-over-year. 

“We saw the orders absolutely crater starting around March [2012] and we had extremely weak orders really through the second and third quarters. It wasn’t until the fourth quarter [of 2012] that we saw orders start to gain traction again,” says Vieth.

Vieth attributes the order increases to some positive external factors.

“Domestic energy production continues to be a story in the U.S. and Canada and that activity is certainly good for trucking,” he says, “and it’s also good because cheap energy prices in North America are also good to help bring manufacturing back in to the North American market place.”

In April, class 8 truck orders going to the United States were up 41.3 percent, while orders to Canada were up 41.0 percent. Meanwhile, orders destined for Mexico were up a staggering 133 percent in the same month.

All of these numbers paint a positive picture for the rest of 2013, however, there is one number that has dropped and is expected to stay that way for the rest of the year: production.

“Our production forecast for North America is actually down and we’re looking at North American class 8 production being down about six percent this year compared to 2012,” says Vieth.

The reason? Last year’s backlog.

“We started 2012 with a very large backlog and by the end of the year the industry had pretty much built the backlog down to threadbare levels and we’ve had good levels through the beginning of the year and that’s certainly helped revived the backlogs, but it’s kind of a contradiction,” Vieth explains. “On one hand, we’re talking about 30 percent-plus increases on a year-over-year basis of orders, but still talking about production being down six percent.”

As the North American economy continues to recover, it seems to indicate a positive remainder of 2013 for the trucking industry.

“I think where the economy is growing is good for trucks and the industry has added a lot of capacity. The tractor fleets continue to get older and ultimately we think that truckers are going to have an increase in profitability as we move through 2013.”

With an increase in profits, drivers may start to consider a new truck. Recent improvements to class 8 trucks have been significant, says Vieth. Better fuel economy, improved aerodynamics and new engine technology are giving drivers more reasons to consider a new vehicle.

“If truckers can get their profitability up enough, I think there’s going to be a lot of truckers saying, ‘You know, it makes a whole lot sense to buy a new truck.’”

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