November Class 8 Orders Tumble in Historic Fall

An engine at the Volvo Hagerstown, Md., plant. (Volvo Group Hagerstown via Facebook)

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A rosy supply chain arriving this holiday season to release handcuffed truck makers and reward fleets awaiting new trucks would certainly be a great gift to the industry — well, maybe next year.

ACT Research reported the commercial vehicle industry is facing what it termed an “everything shortage,” prompting November Class 8 orders to plunge to a 26-year low of 9,800.

That compares with 52,104 orders in the 2020 period, according to ACT. Its November total reflects truck makers’ preliminary net North American orders set to be revised soon. It’s the lowest November total since 1995 when orders were 7,923. The all-time low for November was set in 1982 when orders were 5,462.



“November certainly wasn’t a happy number, but is understandable and explainable,” ACT Vice President Steve Tam said. “One of the most frequent questions we field today is, ‘the truck makers say they are sold out. Is that true?’ The answer is, that depends. They are sold out for the current level of production they are planning next year. But that is not necessarily a static number.”

Tam

Class 8 order backlogs extend deep into 2022, according to ACT. For October, the last full month of data on hand, the Class 8 backlog was nearly 281,000 units and at October’s build rate, the backlog-to-build ratio was 14.6 months, illustrating, ACT noted, the demand versus supply-side challenges.

Tam said ACT was starting to hear of allocations to truckers or dealers “rumbling into 2023 even before we close out this year.”

What the orders are measuring right now is future confidence in the supply chain, said Don Ake, vice president of commercial vehicles at FTR.

“The situation long-term, as fleets see it, is not improving. They want to get on the build schedule, get in line — especially when the expectation is freight is going to continue to grow and they are going to need more trucks next year,” Ake said.

FTR pegged preliminary North American net orders at 9,500.

One truck dealership executive said the orders were “astronomically low” because most truck manufacturers already have allocated a predetermined number of slots for 2022 with pricing available just for the first half of the year — as the truck makers stare out at strong demand, a chronically troubled supply chain, shortages, and rising material and freight costs.

“Fleets aren’t willing to commit beyond that either because of the lack of price certainty, surcharges and other things,” Robert Gomez, executive vice president of sales at Worldwide Equipment, told Transport Topics.

Worldwide Equipment is a multibrand, multilocation medium- and heavy-duty truck dealership based in Knoxville, Tenn.

While Gomez believes orders will rise once third-quarter and fourth-quarter pricing becomes clear, he said one additional delay now comes as fleets are coordinating where their trucks will be domiciled and operating to conform with the dozen or so states that also adhere to the California Air Resources Board’s emissions rules in effect in 2022 — requiring compliant trucks come with additional engine programming and a longer warranty coverage on emissions and aftertreatment components.

“Once a truck is built and it leaves the plant, you are unable to add the CARB certification,” he said. “So you first want to make sure you have it designated as a CARB unit from the start.”

He said there is an added charge of $2,200 to $2,500 per CARB-compliant truck.

CARB in 2018 adopted a regulation that lengthened the minimum engine emissions warranty to five years/350,000 miles for heavy-duty diesel engines used in Class 8 trucks sold and registered in California beginning with the model year 2022. The national government’s mandate is five years/100,000 miles.

“While this was presented as applying only to trucks sold and registered in California, the impact is more far reaching because the Certified Clean Idle label CARB issues allows trucks to idle beyond the state’s five minute idling limit — a few other state’s with idling laws recognize this label as well,” said Mike Tunnell, director of energy and environmental affairs for American Trucking Associations.

Host Mike Freeze talks to the 2021 Transport Topics Trucking's Frontline Heroes, Gene Woolsey and Cully Frisard. Hear a snippet above, and get the full program by going to RoadSigns.TTNews.com.

Without the certified engine label, trucks can’t exceed the five minute limit for idling in unrestricted areas.

Alternatively, truck buyers can purchase a U.S. Environmental Protection Agency-certified engine without the label and additional warranty/cost, he said.

“Both the CARB and EPA engines are identical in terms of emissions, but the only way to get a label is with a California-certified product. It’s an odd twist that will only be compounded when CARB implements its low-NOx engine emission standards beginning with model year 2024,” Tunnell said.

Some speculate there could be a pre-buy coming before then — if orders can be placed and delivered — as those 2024 engines are expected to be even more expensive.

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