William B. Cassidy, Senior Editor | May 23, 2012 2:06PM EDT
Net orders for new heavy-duty truck orders hit their lowest level since 2010 in April, continuing a decline that began in January after strong sales in 2011.
That gave heavy truck manufacturers with production lines jammed by backlogged orders a breather, according to vehicle market research firm ACT Research.
The Class 8 backlog fell by nearly 8,000 units to 106,407 trucks last month, the research firm said, thanks in part to “aggressive build” schedules at truck plants.
The backlog also shrank as trucking companies put orders for new equipment on hold on the U.S. economy slows, truck prices remain high and capacity tight.
That doesn’t bode well for shippers hoping truck capacity might expand with freight demand as the U.S. economy slowly builds speed throughout 2012.
Class 8 net orders in April hit their lowest point since September 2010, according to data from ACT Research and transportation research firm FTR Associates.
Orders for Class 8 heavy-duty tractors surged last year, leaping 72 percent compared with 2010, and December was the best month for orders in six years.
Orders rose 62 percent from July 2011 through December, when net orders totaled 30,293 units, according to ACT Research, but have dropped precipitously.
ACT Research expected April Class 8 orders to approach 17,200 units, following 20,025 net orders in March. FTR Associates pegged April orders at 16,877 units.
“A four month trend is certainly significant and it is causing many in the industry to question their assumptions of growth for 2012,” said FTR President Eric Starks.
Truckers, however, report fairly steady, though not stellar demand. “Freight is out there moving,” said Derek Leathers, president of $2 billion Werner Enterprises.
“Growth may not be as peaked because of optimization” of shipping and trucking networks, Leathers said at the ALK Transportation Technology Summit May 16.
The Cass Freight Shipments Index rose 1.9 percent in April from March, while TransCore DAT’s North American Freight Index climbed 3.5 percent from March.
For-hire truck tonnage as measured by the American Trucking Associations dropped 1.1 percent in April from March, though it rose 3.5 percent year-over-year.
Higher truck prices and rising operating costs are likely to keep a lid on truck orders in 2012, unless truck pricing or freight demand rises much more quickly.
At the ALK event, Leathers said trucking companies still need to replace older vehicles that have pushed the average age of the U.S. tractor fleet up to seven years.
Truckload return on assets is growing only half as fast as revenue per mile, Leathers said, which means carriers still need to raise rates to cover higher equipment costs.
“The capacity gap that exists will not (close) in the short to medium future, because of the aging fleets and the amount of fleet replacement that’s needed,” he said.
As vehicles age, replacing them gets harder, he said. “Try to sell a seven-year-old truck and replace it with a $120,000 truck. See how often you can do that.”
Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter @wbcassidy_joc.