Good day,
The strong year of heavy- and medium-duty truck orders finished on a high note with December 2017 totals coming in at a three-month high. According to ACT Research, preliminary North America Classes 5-8 net order data show the industry booked 58,800 units in December, bringing the full-year net order tally to 543,400. That is an 11% improvement over November and 35% above December 2016.
Class 8 net orders reached 37,500 units, 4,800 above November, the firm said. Medium-duty Classes 5-7 orders were steady in December, ACT said.
“Preliminary data indicate that Classes 5-7 net orders inched higher from November to 21,300 units. However, on a year-over-year basis, orders dropped 3.7%,” said Kenny Vieth, ACT president and senior analyst. “For all of 2017, NA MD Classes 5-7 orders totaled 249,700 units.”
A research note from Stifel reiterated the continued strength in orders. “We continue to believe there is more upside than downside to our 2018 Class 8 production estimate of 305,000 units,” it said. “We believe, as well, that 2018 will not represent the ‘peak’ this cycle, which has become a concern among investors, as we believe 2019 will be stronger yet, supported by increasing replacement demand, improving freight fundamentals (especially pricing), and the cash benefit to fleets and other truck buyers of lower corporate tax rates and increased bonus depreciation. We reiterate our Buy ratings on [Meritor, Navistar and Wabco].”
Stifel went on to say its Class 5-7 industry production estimate remains at 257,000 units in 2018, and this year should be a strong year for production for Class 8 as well.
“We believe the order data reported today should be viewed positively, albeit not significantly out of line with expectations,” the note said. “We continue to believe, as well, that it is too early to sound the alarm on the North American Class 8 cycle, as we believe 2019 should be stronger yet, supported by (1) increasing replacement demand, with a large population of trucks retailed in 2014-2015 coming back for their first trade at the end of their 4- to 5-year trade cycle, (2) improving freight fundamentals, with volume growing and pricing especially expected to be up significantly in 2018, and (3) the added benefit of lower corporate taxes and increased bonus depreciation, which should meaningfully improve cash flow for fleets — especially the truckload industry, which is characterized by thin margins and full tax rates — and further incentivize equipment purchases.”
Did you know?
The U.S. is considering placing tariffs on foreign washers and solar panels. As a result, foreign makers of these products are flooding the U.S. market, with more than 9,000 containers of washers hitting U.S. shores in November, more than double a year ago, according to research firm Panjiva.
Quotable:
“The last month of 2017 was the best monthly order intake since December 2014. December’s order volume represents a sequential improvement of 15%, and a year-over-year gain of 76%.”
– Kenny Vieth, ACT president and senior analyst, on December truck orders
In other news:
Retailers, shippers now paying for tight trucking market
Some retailers and shippers are finding it hard to secure capacity at reasonable prices, and as a result are now delaying non-essential shipments. (Wall Street Journal)
Understanding the tax law’s implications on trucking
Every trucking company and driver will be impacted by the tax law, but how will they really be affected? (Transport Topics)
Foreign companies step up imports to U.S.
A U.S. investigation into unlawful trade practices is resulting in foreign companies stepping up imports of large appliances and solar panels to the U.S. (Supply Chain Brain)
The importance of supply chain visibility
Everyone talks about having visibility into the supply chain, but why is it so important and how can it be achieved? (C.H. Robinson)
U.S. Xpress boosts driver applications through mobile
Carrier U.S. Xpress saw job application numbers increase 60% after it boosted mobile web loading page times. (Fleet Owner)
Final Thoughts
Truck orders closed out 2017 with a bang, with Class 5-8 net orders 11% higher than November’s total. Production was down slightly, increasing the backlog as factories ramp back up this month. Indications continue to be good for a strong 2018 and Stifel analysts believe 2019 will be even better.
Hammer down everyone!
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.
