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July 18, 2019 12:00 PM, EDT

June Class 8 Sales Improve Amid Softer Freight Market

Inter-Coastal Trucking truckSome trucks from Inter-Coastal's fleet. The regional truckload carrier continues to replace older equipment with new trucks. (Inter-Coastal via Facebook)

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U.S. Class 8 retail sales in June improved to climb above 23,000 units, WardsAuto.com reported. They landed against the backdrop of a freight environment that is weakening this year and already is served by too many trucks, other analysts said.

Class 8 sales jumped 10.1% to 23,500 compared with 21,351 in June 2018. For the six-month period, sales rose 22.5% and hit 134,832 compared with 110,025 a year earlier, according to Ward’s.

“We would call the first half of 2019 a mild freight recession centered on the for-hire market. While the U.S. economy overall continues to expand, weakness in many freight metrics fits with slowing activity reported in manufacturing and housing, key freight-generating sectors,” said Tim Denoyer, vice president of ACT Research.

Tim Denoyer, vice president of ACT Research

Denoyer

At the same time, the softening in spot rates all year and contract rates since May, “along with the slowing Class 8 orders are the signals of excess capacity, or too many trucks,” said Steve Tam, also an ACT vice president. “There is definitely uncertainty out there. It all goes back to the freight side of the business.”

Some publicly traded carriers in updated earnings guidance reported July 17 they see excess capacity in the truckload sector, and that lowered their respective second-quarter earnings per share.

ACT Research logo

Meanwhile, all but two truck makers improved sales in June compared with a year earlier — while all of them posted year-to-date gains.

Volvo Trucks North America sold 2,073 trucks in June, a decline of 18.5% from a year earlier. For the six-month period, it posted a 2.4% increase as sales hit 12,738. “We enjoyed a very strong first half of 2019 and expect to see continued economic strength and a healthy market for the rest of the year,” said Magnus Koeck, vice president of marketing for VTNA.

Bangor, Pa.-based Inter-Coastal Trucking is a regional truckload carrier with about 60 Class 8 tractors. It continues to replace older equipment with new trucks as it celebrates 50 years in business.

Magnus Koeck, vice president of marketing for VTNA

Koeck

“In July, we are going to be getting six Volvos, five sleepers and one day cab. We are trading in for replacements. They had new trucks on the lot. We were able to make a deal with them and upgrade our trucks, which helps improve safety, fuel mileage and driver retention. It’s just a morale booster in general,” Inter-Coastal Vice President Robert Lewis Jr. told Transport Topics.

The carrier bought six of Mack Trucks’ Anthem model last year.

VTNA and Mack are units of Volvo Group.

Mack sold 1,886 trucks in June, down 6.9% from a year earlier. For the six-month period, it sold 9,429, up 9.6% from the previous year’s period.

“The steady overall economy, including consumer retail sales, manufacturing levels and job growth, has helped drive retail sales of Class 8 vehicles through June,” said Jonathan Randall, Mack Trucks senior vice president of North American sales

Mack increased its sales from the same six-month period in 2018, he said, “as a result of strong customer demand for our reliable, fuel-efficient and durable trucks, such as the Mack Anthem, and our Uptime services, which continues to set the bar for the industry.”

As for his business conditions, Lewis said, unlike 2018, there are plenty of trucks around, and shippers are calling the shots for the rates.

“It’s not as rosy out there as everybody thinks it is,” he said. “My shippers are telling me their business is just OK. We are tied in to some contracts from the year before, so we’re OK. But next year, I don’t know what is going to happen. There is a lot of uncertainty.”

Independent operators with one or two trucks are coming around looking for work, he added. “The consistency of the freight is not there for them. They are ringing my phone like crazy.”

International Truck showed the biggest improvement, in June and year-to-date. Sales climbed 38.4% to 3,450 in the month. For the six-month period, sales rose 36.6% to 19,520.

Freightliner, a unit of Daimler Trucks North America, remained the market leader as sales increased 7.1% to 8,215 trucks compared with a year earlier. For the six-month period, sales rose 29% to 50,527.

Western Star, also a DTNA brand, sold 550 trucks in June as sales rose 1.5%. Year-to-date sales jumped 9.2% to 3,086.

Kenworth Truck Co. sold 3,699 trucks in June, or 34.6% more than a year earlier. Year-to-date, sales hit 19,307, or 22.3% more than in the 2018 period.

Kenny Vieth, ACT President and Senior Analyst

Ake

Peterbilt Motors Co. posted sales of 3,627 in June. That was 9% more than a year earlier. In the six-month period, sales reached 20,225, or 19.8% higher than a year earlier.

Kenworth and Peterbilt are brands of Paccar Inc.

FTR Vice President Don Ake participated in recent a radio show interview, and he said a truck driver called in to say the latest new trucks that came in to the fleet where he works are sitting idle.

“I would suspect those trucks are sitting because business has slowed down,” Ake said. “We still have a reckoning coming sometime in the next few months. There is a good chance that June was the peak of per-day truck sales for this year.”

Other truck makers either declined or did not respond to requests for comment.