Heavy-Duty Truck Order Slump Deepens
August 03 2016 - 02:40PM
Dow Jones News
An unusually high number of cancellations in orders of
heavy-duty trucks caused net orders in North America to plummet to
the lowest point in over six years, according to a new report by
research firm FTR.
Trucking companies in July ordered 10,400 Class 8 trucks, used
for long-haul routes, below expectations and 56% fewer than the
same period last year, according to preliminary numbers from
research firm FTR released Wednesday. It was the fewest number of
orders since February of 2010.
Heavy-duty truck orders, which have been sliding for months,
were hit with "several significant order cancellations," which is
uncharacteristic for this time of year, FTR said in its report.
"The high cancellations are likely the result of fleets placing
large orders at the end of 2015, for delivery a year out," said Don
Ake, vice president of commercial vehicles at FTR in the
report.
While sluggish freight growth has caused fleets to halt any
expansions, there may be some increase in August orders as they
replace older units, Mr. Ake said. Truck manufacturers have laid
off thousands of workers at plants around the country this year
amid the falling demand.
The report adds to what analysts and industry executives expect
to be a grim few months for the trucking industry, in part a result
of low growth in manufacturing activity, which has a strong impact
on trucking demand.
The Institute of Supply Management said this week that its
manufacturing activity index declined to 52.6 in July from 53.2 in
June, showing modest, and decelerating, growth among U.S.
factories, which are having a harder time with exports because of
the strong dollar.
Truck engine maker Cummins Inc. this week blamed declining
earnings in the second quarter in part on weak truck demand in
North America. The company shipped 16,000 engines for heavy-duty
trucks in North America in the quarter, 43% fewer than a year
ago.
There are "too many trucks chasing too little freight," said
Steve Tam, vice president at ACT Research, which also tracks
heavy-duty truck sales. Truck orders are low now as fleets adjust
their overly optimistic expansion plans after seeing strong growth
in 2014 and early last year, he said. ACT reported 10,500 Class 8
orders for July.
"I think the trucking community had an expectation that [growth]
was going to continue. But with 20/20 hindsight, that did not
happen. Freight has been very flat for basically the last year," he
said. "There are anecdotal signs that freight is improving very
modestly, but I would liken it to treading water but still below
surface at this point."
Write to Loretta Chao at loretta.chao@wsj.com
(END) Dow Jones Newswires
August 03, 2016 14:25 ET (18:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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