Trucking fleets jumped back into the market for Class 8 semis in July, ordering nearly twice as many vehicles as the same month last year, even as concerns have risen nationwide about a resurgence in Covid-19 during the ongoing pandemic, according to a report from transportation consulting firm ACT Research.
Preliminary Class 8 net orders in North America for July were 20,300 units, rising 27% from June, and up 98% from July 2019, the Columbus, Ind.-based firm said. In a contrary move, smaller delivery trucks in Classes 5-7 saw orders slip to 16,700 units, down 6% month-over-month and 3% below their year-ago July volume.
The numbers were nearly identical to a report from industry researcher FTR Transportation Intelligence which showed that preliminary North American Class 8 net orders rebounded in July to 20,000 units, up 28% from June, and double the orders in July of 2019.
Both sets of statistics show the ongoing turmoil caused by the relentless pandemic, which has caused demand to spike for certain goods even as it leaves other broad swathes of the economy nearly idle.
At the same time, several economic indicators are flashing warning lights about the prospects of future growth, according to Kenny Vieth, ACT’s president and senior analyst. “Less than a week ago, we learned that the U.S. economy was 9.5% smaller in Q2 than it was in Q1 and 10.6% below its end of 2019 level.” Vieth said in a release. “Additionally, when Covid began to bite in late February, there was a strong case to be made that the trucking industry was suffering from lingering overcapacity that was still putting downward pressure on freight rates, and by extension, carrier profitability.”
Despite those concerns, the market is driving a rise in orders because many fleets remained sidelined by coronavirus conditions, even as demand for freight carrying space rises in other sectors.
“The context of rising rates and improving carrier profits adds perspective to what is now occurring in Class 8 orders: Supply matters,” Veith said. “With many drivers (and trucks) sidelined, there is now insufficient available capacity for rebounding freight volumes. There is a strong relationship historically between carrier profits and equipment demand.”
Although demand for new trucks was better than expected, Bloomington, Indiana-based FTR warned that uncertainty around increasing coronavirus case counts and a lack of Congressional action on unemployment benefits may dampen the market as we move into fall.
“As we hit the height of summer demand, the freight markets showed strength and resilience and that led to additional orders for trucks. The order activity for both June and July was more robust than expected and is good news for the equipment producers. However, despite the increasing orders, FTR still expects the Class 8 market to maintain a slow, steady recovery,” Jonathan Starks, FTR’s chief intelligence officer, said in a release.
“The freight markets sustained a traumatic decline of volumes at the start of the pandemic and consumer demand, on an absolute basis, will remain weaker as we deal with high levels of unemployment and a Congress that has been unable to foster a bi-partisan solution to stimulate demand,” Starks said.
