Class 8 truck orders slipped in September as OEMs remain cautious to overextend their order books amid ongoing component shortages and production delays.
ACT Research reported preliminary Class 8 orders of 27,400 units last month; FTR was slightly higher at 28,100 units. Both totals were down nearly 30 percent from the prior month. FTR added last month's total also was down 12 percent year over year.
“September traditionally marks the transition from the annual summer order trough into fall peak order activity,” says Kenny Vieth, ACT’s president and senior analyst. “However, with demand indicators from freight activity to freight rates and carrier profits in blatant contrast to equipment shortages and capacity constraints across all transportation modes, it is understandable that September’s Classes 5-8 order volume could be construed as disappointing relative to the economic set-up.”
FTR adds the fall in orders came as OEMs are managing their Q1 production slots in a variety of ways. Some manufactures continue to enter orders in a measured fashion, filling openings as they become available. Other OEMs are rolling unmet 2021 orders into 2022 and delaying new 2022 bookings. Supply chain disruptions are now expected to persist well into 2022, and OEMs are having problems determining how many trucks they will be able to build in the first quarter of next year, the company says.
“This is a complicated, bizarre situation that OEMs have never before encountered," says Don Ake, FTR vice president, commercial vehicles. "There are many orders that were expected to be built in 2021 that cannot be completed due to the severe component shortages, most notedly, semiconductors. The OEMs are unsure when they can build the leftover 2021 orders and any new orders because the parts shortages are now expected to continue well into next year. They can’t schedule production because they don’t know their actual build capacity."
Vieth agrees. "It is important to note that it is not demand, but supply that is dictating new order activity, as OEMs are being judicious in fully opening 2022 order books when there is not clear visibility of supply-chain capacity next year," he says. "And, while the story is just starting to develop, recent reports of energy sector issues in China dampen hope for the current supply situation to surprise on the high-side in terms of recovery timing.”
Class 8 orders now total 453,000 units for the previous 12 months, FTR notes.
"The order number is not a true indicator of 2022 truck demand," Ake adds. "There is significant pent-up demand for trucks leftover from 2021 because OEMs were limited in their output. Add to this the robust demand expected for 2022 due to sturdy freight growth. The fleets have a tremendous need for new trucks in 2022, however, the OEMs are delaying entering orders until the supply-chain situation is clearer."
Yet Ake adds the supply chain remains "a huge mess," with raw materials, parts and components are so constricted, it will take many months to rectify.