Why Class 8 Orders Have Fallen in May

Class 8, or heavy-duty truck, orders fell last month, deviating from steady levels of previous months before. Preliminary data from FTR Transportation Intelligence saw North American Class 8 net orders totaling to 13,300 this past May. For reference, the firm points out this is a 13 percent decrease compared to April and a 43 percent decrease compared to May 2021.

ACT Research, another firm, indicates total Class 8 truck orders have equated to 270,000 units over the last 12 months, lending a monthly average of 22,500 units.

Suffice to say, Class 8 orders in May fell up short to this monthly averaged figure.

Why Have Class 8 Orders Fallen?

Seasonal Lull in Demand

Fleet Owner reported back in April that heavy-duty truck orders saw little variation in the first quarter of 2022. The number of units stayed level at around 21,000 for each month.  

Those numbers are a far cry from what has been reported this May. However, ACT Research Vice President and Senior Analyst Eric Crawford notes that this trend is usual for this time of year. Courtesy of Freight Waves, he reasons: “Orders tend to be seasonally weak, as original trucking manufacturers (OEMs) typically have yet to open their forward-year build schedules”. Such is the case currently for 2023.

Don Ake, vice president of commercial vehicles for FTR quipped about demand trends with an apt comparison. “This is like ticket sales for a popular concert. At the beginning, sales are high because there are plenty of seats available. But at the end, fewer tickets are sold because there are fewer seats to sell,” he remarked in a post on FTR’s website.

Coupled with supply chain issues, which will be discussed shortly, Ake projects that orders could slide to under 10,000 per month through the summer.

Supply Chain Disruptions

While softened demand for heavy-duty orders this time of year is typical, what is not are the supply chain disruptions that have unfolded this year.

Ongoing war in eastern Europe and Covid-related lockdowns in China have especially strained production for supply chains of OEMs. Most notably, the supply of semiconductors, a critical component to building heavy-duty vehicles.

With depleted production of these essential parts, OEMs cannot just increase build rates and resume with an adapted rollout. Rather, these truck manufacturers are not confident they can ramp up production in the second half of the year and, according to FTR, they have nearly run out of build slots completely for 2022.

Additionally, due to the uncertainty and inflated costs of these sought-after commodities, OEMs struggle to accurately quote their costs. This has led to an understandable weariness among these truck manufacturers to take on and book orders for 2023.

Final Thoughts

Again, it is usual for lower demand of Class 8 orders around this time of year, however Ake still asserts: “Demand for new trucks remains healthy”. He goes on to remark that freight is growing, and fleets will need more trucks to keep up with consumer demand. Additionally, there will be demand from fleets looking to trade in older vehicles for newer replacements.

With orders dwindling this past May due to both demand lulls and supply chain disruptions, the cyclical nature of Class 8 order trends forecast demand rising as 2023 approaches. Meanwhile, uncertainty looms over the heads of manufacturers who cannot fully determine if they will have the means of production to satisfy orders in the coming year. 

Please do not hesitate to contact one of our team members if you have any further questions on this topic or any others in domestic logistics.

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