FREE SUBSCRIPTION Includes: The Advisor Daily eBlast + Exclusive Content + Professional Network Membership: JOIN NOW LOGIN
Skip Navigation LinksHome / News / Read News


ACT Research: Preliminary Classes 5-8 Order Intake Failed to Sustain in November

December 04, 2019, 07:09 AM
Filed Under: Trucking

Preliminary November data show that Classes 5-8 net order volumes were uniformly soft. Combined North American Classes 5-8 intake fell 15 percent month over month and 38 percent year over year in November on a nominal basis, ACT Research reported. Preliminary North America Class 8 net order data show the industry booked 17,500 units in November, down 20 percent from October, while Classes 5-7 orders fell 8 percent month over month, to 15,300 units. Complete industry data for November, including final order numbers, will be published by ACT Research in mid-December.

“Preliminary November data show that Class 8 net orders failed to sustain October’s encouraging start to the order season,” said Tim Denoyer, ACT’s Vice President and Senior Analyst. “The freight market downturn worsened in the past month and uncertainty surrounding trade and tariffs continue to weigh on truck buyers’ psyches. With rising pressure on carrier profits from the combined impact of lower rates and the recent, rather sudden jump in insurance premia, recent events have not developed in the industry’s favor.”

Denoyer concluded, “While private fleets continue to add capacity on the retail end, the market is increasingly heeding for-hire price signals and the stage is being set to right-size the fleet, bringing it closer to equilibrium with the work to be done.”

Regarding the medium duty segment, Denoyer added, “This marks an eighth consecutive month of below-trend net order activity, likely reflecting souring investment sentiment amid ongoing trade uncertainty and adding pressure to the 2020 production outlook.”

ACT Research For-Hire Trucking Index: Bottoming Process Underway?

The latest release of ACT’s For-Hire Trucking Index, with October data, showed a modest Volume Index, at 52.0 (seasonally adjusted). October’s slower growth followed a sharply stronger 59.6 in September. The Pricing Index returned to negative territory in October, at 45.8 (SA), after recovering with volumes in September, at 52.5.

Kenny Vieth, ACT Research’s President and Senior Analyst commented, “The freight industry improvement has not been broad-based in the past few months, and we continue to see plenty of evidence that points to inventory building ahead of tariffs as a key driver of recent performance, though strong consumer trends are also helping.”

He added, “With still-aggressive private fleet growth and a weak US manufacturing sector, choppy results will likely continue, but the past few months suggest a bottoming process is underway.”

In a reflection of the imbalance between demand for freight services and the supply of Class 8 trucks competing for freight, Pricing Index shows the path to rising profitability is not yet apparent. Regarding the Rate Index, Vieth said, “After collapsing in Q2, the pricing environment stabilized in the past few months. October’s lowest-since-June print suggests that pressure from capacity growth persists in the near to mid-term. That said, spikes in freight volumes, akin to what occurred in September, could perhaps lift rates on a one-off basis again, ahead of threatened tariffs in December.”

The ACT Freight Forecast provides forecasts for the direction of volumes and contract rates quarterly through 2020 with three years of annual forecasts for the truckload, less-than-truckload and intermodal segments of the transportation industry. For the truckload spot market, the report provides forecasts for the next 12 months.

Comments From Our Members

You must be an Equipment Finance Advisor member to post comments. Login or Join Now.