Truck orders got off to a slow start in 2019 with early reports from industry analysts ACT Research and FTR tracking a 26% decline in January compared to December 2018.
ACT Research’s preliminary numbers show only 15,800 orders in January, continuing the trend of declining monthly truck orders for the past few months. January truck orders were 68% lower than the same month in 2018 as well.
The reason for lower truck orders is logical: 2018 was a banner year for Class 8 truck orders and fleets were jockeying to put in orders that wouldn’t be fulfilled until mid-way through this year. With considerable backlogs as fleets wait for equipment to get built, the problem has little to do with supply and demand, according to ACT.
“We view this January’s order softness as having more to do with pulled-forward orders and a very large Class 8 backlog than with the current supply-demand balance,” said Kenny Vieth, ACT president and senior analyst. “Softening freight growth and strong Class 8 capacity additions suggest that the supply-demand balance will become a story in 2019, but January seems a premature start to that tale.”
Backlogs are expected to fall, but should remain over 70% higher than a year ago. Class 8 orders for the past 12 months have now totaled 402,000 units, according to FTR. Cancellations are expected to remain high and order rates are likely to remain suppressed for the first few months of the year.
Medium-duty Class 5-7 truck orders increased slightly in January, hitting 23,400 units. This is right around the 23,000-unit average for the past six months.
“This is more of a resting point than a turning point. There is an enormous amount of orders in the backlog. The key will be how many of these trucks get built and when,” said Don Ake, FTR vice president of commercial vehicles. “The fundamentals of the economy and freight growth remain solid, so there is no reason to panic.”