FTR says April’s orders were 40 percent below the same month in 2019, but the company also notes the low order level does not in any way reflect a softening of demand, but rather the fact that many large OEM’s have filled their order boards for 2019. Backlogs remain hefty, with robust production levels. Trailers orders for the past 12 months now total 364,000 units, the report states.
“We expect the backlogs to remain very healthy, supporting continued high build rates. Orders likely will stay at low volumes through the summer, or until OEMs open the 2020 order boards,” says Don Ake, FTR vice president of commercial vehicles.
“OEMs have been cautious about taking longer-term orders due to uncertainty over future costs. Right now, the Chinese tariff situation is just adding to an already cloudy outlook,” Ake says.
ACT Research Director of CV Transportation Analysis adds, “Several factors appear to be in play. OEMs continue to be reticent to fully open 2020 orderboards. This is evident in our measurement of the extent of the industry’s backlog, which has remained in the November or December timeframe throughout the first four months of 2019.
“While we hear comments of some fleets anxiously awaiting the chance to snap up 2020 build slots, some also appear to be evaluating their existing commitments. Cancellations in April were the highest since August 2016 on both a unit and percent of backlog basis, and have remained elevated since December. That resulted in an interesting dichotomy in April orders; while new orders were actually up versus March, cancellations were significant enough to pull the net order number into the red month-over-month.”
Additionally, ACT Research says production continues at a brisk pace, although material/component availability and staffing continue to challenge OEMs. Seasonal patterns actually called for a slight increase for April production, so that small sequential decline likely confirms the impact of the aforementioned headwinds. Additionally, our discussions indicate that red-tagged units continue to challenge OEM production efficiency, the company says.
