FTR reports preliminary North American Class 8 net orders dropped in November to 9,500 units, down 41% from October and down 82% y/y. Orders were the lowest for the month of November since 1995. The low order total in November is not due to any lack of demand for new equipment which is very high but rather due to the uncertainty in the supply chain. Class 8 orders now total a still impressive 393,000 units for the previous 12 months.
OEMs remain very reluctant to increase total backlogs with so much uncertainty about the supply chain. Component deliveries, especially semiconductors, have been unreliable since March. OEMs booked a huge number of orders a year ago, expecting to be able to build at full capacity throughout 2021, but parts and components shortages prevented them from completing many of these trucks.
Don Ake, vice president of commercial vehicles for FTR commented, “The low order numbers in November in no way are representative of total demand. The weak volumes are because OEMs are managing their backlogs very carefully. After overbooking almost every month in 2021, the OEMs are being extremely meticulous about scheduling commitments in 2022.
“This strategy will continue until the supply chain situation improves. Once the OEMs are confident they can obtain the necessary production inputs, they will boost production and enter more orders. Backlogs remain at sturdy levels, but OEMs don’t want them much higher until they know their manufacturing capacity.
“Demand for new trucks is at record levels. There is tremendous pent-up demand generated in 2020 and 2021. Spot rates are at record levels, and contract rates are rising. Prices for used trucks are also at record highs. And when the manufacturing sector of the economy gets past the supply chain crisis, there will be even more freight to haul.”