Trucking news: ACT and FTR report July Class 8 preliminary orders are down

Data published by ACT Research, a provider of data and analysis for trucks and other commercial vehicles, and freight transportation forecasting firm and consultancy FTR Associates indicated that preliminary data for Class 8 trucks in July is down.

ACT reported that preliminary net orders in July for heavy-duty Class 8 vehicles in North American markets are expected to hit 18,800 units when final data is released later this month, which the firm said is “well-above year-ago levels.”

ACT President and Senior Analyst Kenny Vieth commented in a statement that July is the weakest order month of the year, making the drop in orders below 20,000 units expected, adding that when seasonally-adjusted July’s Class 8 orders are in line with recent activity. He also pointed out that August is typically the second weakest month for Class 8 orders.

“If I look at orders from November through April, which is the peak order period of the year on a seasonally-adjusted basis, orders were placed at an almost 333,000 unit rate,” said Vieth in an interview. “And if I look at orders placed from May to July on seasonally-adjusted annualized basis, orders were in the 265,000 range. While we are still strong and orders are in line with expectations, we have seen a step down in the rate of order placement…partly because July and August are both usually weak months.”

Class 8 backlogs, said Vieth, have risen substantially since last fall with many truckers already having orders placed and there is now less pressure to place them now. There is also bonus depreciation coming up at the end of the year, which incentivizes carriers to place orders in March and April to ensure delivery by the end of year and take advantage of the 100 percent depreciation allowance in 2011.

The bonus depreciation allows buyers to depreciate a piece of equipment by three or four years, depending on when the equipment was purchased. As an example, if a carrier buys a $120,000 piece of equipment, it can write it down on taxes at $40,000 per year for three years.

FTR Associates reported that its preliminary January data for Class 8 truck total net orders for North American OEM’s came in at 18,532, which FTR noted is its lowest monthly tally since September 2010 and the third straight month with declining order numbers. It also noted that July was off from June by 12 percent but were up 63 percent year-over-year, and annualized Class 8 net orders for the last three months were 250,400 units.

“Although greatly reduced from the torrid pace seen earlier this year, the July numbers came in as we expected,” said FTR President Eric Starks in a statement. “OEM order boards and available build capacity are nearly full through the end of the year. New orders generally slow seasonally during the summer and therefore we would not conclude that July’s data indicates a prolonged slowing in overall order activity. We remain cautiously optimistic that some stronger order activity will return late this year for 2012 delivery. However, we will certainly be watching for any evidence that recent economic trends are having a negative impact on fleet plans for 2012 and beyond.”