Class 8 Orders Remain Tight Due to OEM Production Issues

Supply chain constraints and component shortages continue to put pressure on North American Class 8 orders, and it shows in the October order numbers.

North American Class 8 orders were down about 12% compared with September and about 39% year-over-year to between 23,600 and 24,500 units, according to ACT Research and FTR, respectively.

OEMs are finding it difficult to manage orders that will not get built this year due to component shortages. Production rates in Q1 remain uncertain due to supply chain difficulties and worker availability. OEMs continue to be careful not to overbook fleet orders for the first half of 2022, Don Ake, FTR’s vice president of commercial vehicles, said in a press release.

“The OEMs are using different methods in managing the backlog,” Ake said. “Some are cancelling 2021 orders and rebooking those orders in 2022, sometimes at higher prices, as commodity and other costs remain elevated. Others are only booking a limited number of orders every month.”

At the recent American Trucking Associations Management Conference and Exhibition, fleets shared stories of cancelled orders. "We had 100 percent of our new truck orders cancelled in 2021," despite having relationships with multiple OEMs, said Cari Baylor, president of Baylor Trucking. On the same panel discussion, Pilot Flying J reported it had 35% of its 2021 orders cancelled. "It’s not just chips, it’s all kinds of things," said Shameek Konar, CEO of Pilot Co.

The situation means fleets are keeping trucks longer, which is driving up maintenance costs, as is the parts shortage that's affecting the OEMs. Baylor said her company had pre-ordered parts and has been shipping them to dealers to get repairs done on their trucks. She compared the way they're having to swap out parts among trucks to Mr. Potato Head.

Class 8 orders have stayed within the 23,000-28,000-unit range for five of the last six months as OEMs deal with production issues, according to ACT Research officials.

The order rate has been tracking the production rate since May, with a couple of exceptions, Ake said. This indicates that the market is “essentially frozen” in this range of around 22,000-26,000 trucks.

“Without the clogged supply chain, production would be significantly higher, and orders would be elevated also,” Ake said.

Class 8 orders now total 437,000 units for the previous 12 months, according to FTR.

“With critical economic and industry demand drivers at, or near, record levels, industry strength is exhibited in long backlog lead-times, rather than soft orders in October,” Kenny Vieth, ACT’s president and senior analyst, said in a press release. “In addition to ongoing strength in key freight-generating economic sectors and pent-up goods demand growing across a broad front, ACT’s preliminary read of the publicly traded [truckload] carriers Q3 financial results shows net profits approaching best-ever levels.”