March 6, 2018 5:00 PM, EST

February Class 8 Orders Add to the Surge

Mack Trucks

Orders for Class 8 vehicles kept accelerating in February, passing 40,000 for only the ninth time, analysts said.

North American orders of heavy-duty trucks hit 40,600, which was the eighth-best order month on record, ACT Research Co. reported, citing preliminary figures it will revise when truck makers issue their final numbers.

February was up 82% compared with the 22,300 units ordered a year earlier. Orders have been above 35,000 for four of the past five months and January’s total was the second-highest ever, 48,700.

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“Yet another better-than-expected month. It makes life rather interesting,” said ACT Vice President Steve Tam.

Expectations were for orders in the “low-30s range,” Credit Suisse analyst Jamie Cook wrote in a note to investors.

Small and mid-sized fleets continue to add trucks and feel they will be able to steal drivers from other fleets, Tam said, while the large fleets continue to maintain they are not adding trucks to grow, just for replacement.

The up cycle that is most comparable to the one the industry finds itself in now occurred in 2014 to 2015, he said.

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“Then the industry was very excited about what it was seeing in the freight market, and you saw demand [for new trucks] rise rapidly and remain elevated. And unfortunately, demand stayed there too. And that is the cycle, I think, we are setting ourselves up for now, as well,” he said.

ACT’s North American production forecast this year is for 324,600 Class 8s and 311,200 next year, or about a 4% drop.

Then comes a decline of 23% or more, he said.

“We have 2020 dropping to 238,200 [units], and that is probably going to fall more steeply,” Tam added.

The research company FTR pegged February orders at 40,200.

“The thing that is interesting is getting these orders all the way into February,” said Don Ake, vice president of commercial vehicles at FTR. His earlier analysis called for volumes like this in October of last year, which would have fit the traditional pattern.

“For February numbers to exceed October’s [which were about 36,000] is unusual. We knew [the increase] was going to happen, it just was delayed,” Ake said.

Last October, a fourth-quarter slump slowed production, allowing truck makers’ suppliers “to run at a nice optimal rate, and that lowers your production costs,” Ake said.

“But production now will ramp up,” he said. “You are going to see production increases through September, at rates higher than in 2017. So there is going to be more stress on production and the supplier base in 2018.”

FTR is forecasting peak production will occur in the second quarter, he said.

Meanwhile, in some cases, interest in onboard safety systems is stirring truck orders.

Orders poured in in February at near-record levels, Roger Nielsen, CEO of Daimler Trucks North America, said during a recent online roundtable discussion with reporters.

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“Customer acceptance of Detroit Assurance has been a great element of our success,” he said.

About 90% of all Cascadia models come with that suite of safety systems, “far exceeding” DTNA’s expectations, he said.

Version 4.0 of Detroit Assurance includes changes in the radar, now with active brake assist for full braking on stationary objects. An optional camera system will assist in lane departure warnings and the adaptive cruise control adjusts the truck’s cruising speed to maintain a 3.6-second following distance, allowing the truck to remain in cruise control longer, according to DTNA.

Tam said that focus on safety systems and fuel efficiency “plays down through every level of the trucking population.”

Incentives are also playing a role in orders.

For instance, Peterbilt Motors Co., has two rebates for vocational customers throughout 2018. It offers a $2,000 cash rebate on its 567 and 520 models factory spec’ed to support mixer, pump, and other concrete industry equipment. Members of the American Logger Council can get the same cash rebate on the 567.

In addition, Peterbilt has two cash rebates for owner-operators in 2018.

Members of the Owner-Operator Independent Drivers Association are eligible for a $1,500 rebate on Peterbilt’s 579, 567 and 389 models when spec’d with a sleeper. The same rebate for the same models is available to Landstar System operators.

Peterbilt is a unit of Paccar Inc.

Landstar ranks No. 9 on the Transport Topics list the Top 100 for-hire carriers in North America.