Class 8 Orders Steady in July

Backlog Reaches Deep Into 2022
Kenworth T680
The Kenworth T680 Next Gen. “DAF, Kenworth and Peterbilt are sold out for the year,” Feight says. (Truck PR via Flickr)

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Class 8 orders poked along in July at about 25,000, ACT Research reported as order boards appear full for the remainder of this year.

Orders reached 25,800 compared with 20,300 a year earlier, according to ACT, which cited truck makers’ preliminary data.

July’s volume also was flat compared with June’s 25,809 net orders.

Given the extended order backlog truck makers have now, the opening of the order books for 2022 is different this time around, Steve Tam, vice president at ACT, told Transport Topics.

“I think the truck makers, generally speaking, are let’s say selectively deciding how they open up their order books, taking care of key accounts first. I think that is part of what you’re seeing,” he said.

He added that strategy is not being deployed “uniformly or even at the same time. So there is some lumpiness in the intake. The other issue is the backlog on the books is a 12-month rolling backlog. If you order today you are looking at taking delivery sometime in the second quarter if you are lucky.”

John Kuhlow, chief financial officer at J.B. Hunt Transport Services, said during a recent earnings call: “The orders that we have placed, some of those are going to be pushed into 2022.”

J.B. Hunt ranks No. 4 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

Paccar Inc. CEO Preston Feight said during a second-quarter earnings call: “DAF, Kenworth and Peterbilt are sold out for the year.”

DAF is its European brand. Kenworth Truck Co. and Peterbilt Motors Co. are sold in North America.

Feight added Paccar had 6,500 red-tagged trucks waiting for a component as of the end of the second quarter.

“We’ve had some trucks that we built minus a component, and we received a batch of components for those and have shipped those out,” Feight said. “Only to find ourselves in different circumstances with like a Malaysia COVID outbreak, which then causes a constraint of a different component. So it’s pretty dynamic and hard to really talk about which trucks ship when in the [third] quarter.”

Feight said the pricing for trucks already ordered was largely set. “But I would tell you that these have been unusual times, and so we’ve adjusted pricing as necessary to match into raw materials pricing. And that’s kind of the way we’ve approached the market.”

FTR pegged preliminary Class 8 orders at 26,500.

“Production has been stuck for three months, retail sales stuck for the same time, and it seems orders are stuck at the bottom of this cycle. But it is weird,” Don Ake, vice president of commercial vehicles at FTR, told TT.

“The typical bottom of a cycle is 12,000 units, and that comes typically in July. This cycle it was about 24,000 units in May [ACT had 22,900]. Right now the supply chain thing just keeps dragging out. It’s got to get better, but is it going to be fine?”

He added production will not get caught up this year and will be starting from behind in January. “So this issue just keeps going.”

Dana Inc. in its second-quarter earnings report forecast North American Class 8 production for all of 2021 will increase 46% over 2020, which was 38% lower compared with record production in 2019 — improving with the economic outlook and cyclical demand.

Meritor in its fiscal year third-quarter report noted its fiscal 2021 outlook for North American Class 8 production is 285,000, near the upper end of its prior outlook of 270,000 to 290,000.

“Orders have been within our expectations as build slots are full for 2021, and 2022 order books are not fully open,” Meritor CFO Carl Anderson said during the earnings call.

Meanwhile, July is that time of year, from a seasonal perspective, when truckers are not typically ordering anyway, Tam said. “They are now biding their time and waiting for a catalyst to make them order a truck.”

He said ACT is hearing from dealers that many of them are not being permitted to order yet, or are only able to order a portion of the volume they desire. “That said, it is not that truckers are not ordering, just that they are not ordering as much.”

At the same time, Tam added there is no question it is a wipeout market for ordering Class 8s this year.

“The question is, from a demand perspective, is the cycle starting to peak. The follow-up question to that is if it is peaking, how long is the plateau,” he said. “From a demand perspective, when you look at the freight markets and the spot rates market and the inability of the industry to bring new capacity to bear, that argues for a somewhat elongated recovery.”

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