Heavy-Duty Truck Orders Hit a Record Pace
Date: Thursday, April 5, 2018
Source: Wall Street Journal
Trucking companies ordered big rigs at a record pace in the first quarter, racing to meet growing demand in a red-hot U.S. freight market.
Fleets ordered 133,900 heavy-duty trucks in the first three months of the year, nearly double the orders from the first quarter of 2017, analyst group FTR said in a report released Tuesday. The report included final numbers for January and February and a preliminary estimate of 46,300 new orders in March.
The ordering extends a strong move to build up trucking capacity that began in the middle of last year as the U.S. economy picked up steam.
Fleets “are getting calls to move shipments and they can’t do it because they don’t have the capacity,” said Don Ake, FTR’s vice president for commercial vehicles, in an interview Wednesday, adding, “The last three months, they’re ordering trucks and trailers like crazy to try and get the capacity.”
ACT Research, another transportation equipment analysis group, said in a separate report Tuesday that it counted 46,900 orders for heavy-duty Class 8 trucks—the big rigs that haul goods mostly between cities—more than double the orders from a year ago.
Trucking-industry figures suggest orders for new vehicles are lagging behind growing U.S. freight demand, however. DAT Solutions LLC, which matches available loads to trucks in the spot market, says shipments on its “load board” rose 27% from February to March while the number of trucks available increased only 14%.
The gap between demand and capacity has led truckers to charge higher prices, giving fleet owners more cash to replace older vehicles and greater confidence in future demand. DAT says average rates on the spot market were up nearly a third in March from the same month a year ago.
Many trucking companies also reaped a windfall in the tax law enacted in January, and they appear to be investing some of the gains in new trucks. “The fire was already burning nicely and Congress dumped gasoline on it,” said ACT analyst Kenny Vieth.
The persistent growth in orders has pushed backlogs at truck makers to a nearly three-year high, according to ACT.
Shares in truck manufacturer Navistar International Corp. NAV +3.84% were down 1.1% to $33.97 in trading early Wednesday, while shares at rival truck maker Paccar Inc.PCAR +1.74% were off 0.03% to $65.69. Engine maker Cummins Inc.’s CMI +1.29% shares were down 1.2% to $158.
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