Preliminary Class 8 net orders trend down in November

Preliminary November North American Class 8 net truck orders saw both sequential and annual declines, according to recent data respectively issued by freight transportation consultancy FTR and ACT Research, a provider of data and analysis for trucks and other commercial vehicles.  

FTR reported that preliminary November North American Class 8 net orders—at 9,500 units—fell 41% from October and were down 82% annually. The firm said that this marks the lowest November tally going back to 1995, adding this low level of orders is not attributed to lack of demand for new equipment, which remains high. Instead, it is due to supply chain uncertainty. What’s more, it added that over the last 12 months, Class 8 orders have come in at 393,000 over the previous 12 months, which FTR described as “impressive.”

FTR also noted that, at the present time, OEMs are still not willing to increase total backlogs, given the ongoing supply chain uncertainty. Reasons for this include component deliveries, especially semiconductors, have been unreliable since March and OEMs having booked a huge number of orders a year ago, expecting to be able to build at full capacity throughout 2021, but parts and components shortages prevented them from completing many of these trucks. 

“The low order numbers in November in no way are representative of total demand,” said Don Ake, vice president of commercial vehicles for FTR, in a statement. “The weak volumes are because OEMs are managing their backlogs very carefully. After overbooking almost every month in 2021, the OEMs are being extremely meticulous about scheduling commitments in 2022.

This strategy will continue until the supply chain situation improves. Once the OEMs are confident they can obtain the necessary production inputs, they will boost production and enter more orders. Backlogs remain at sturdy levels, but OEMs don’t want them much higher until they know their manufacturing capacity. Demand for new trucks is at record levels. There is tremendous pent-up demand generated in 2020 and 2021. Spot rates are at record levels, and contract rates are rising. Prices for used trucks are also at record highs. And when the manufacturing sector of the economy gets past the supply chain crisis, there will be even more freight to haul.”

ACT data: November preliminary Class 8 net orders—at 9,800 units—were down from October’s preliminary 23,600 Class 8 net orders.

“Long backlog lead times resulting from ongoing supply-side constraints continue to pressure new order activity,” said Kenny Vieth, ACT’s President and Senior Analyst, in a statement. “With backlogs stretching into late 2022 and still no clear visibility about the easing of the ‘everything’ shortage, modest November order results suggest the OEMs are continuing to take a more cautious approach to booking orders so as not to extend the cycle of customer expectations management. Importantly, we reiterate, with critical economic and industry demand drivers at, or near, record levels, industry strength is exhibited in long backlog lead times, rather than seasonally weak orders. Looking to October data, the last full month of data in hand, the Class 8 backlog was nearly 281,000 units and at October’s build rate, the backlog-to-build ratio was 14.6 months, illustrating demand versus supply-side challenges.”