It was a fairly boring week for trucking stat enthusiasts. Class 8 orders for April came in as expected, avoiding a sharp decline but continuing to be constrained by excess capacity.
The spot market picture for the most recent week was also nothing to write home about. As expected due to seasonal factors, dry van rates fell while reefer rates improved. But…the Roadcheck bump in rates is just around the corner!
Class 8 orders meet subdued expectations
Preliminary Class 8 truck orders came in at about 14,000 units in April, down 28% from March levels but up 12.5% year over year, FTR reports.
No surprises there, FTR indicates, as orders were consistent with the recent demand trend and in line with seasonal expectations. First quarter orders put to rest concerns of a rapid decline in demand, with the market performing slightly above replacement level demand.
“Despite the month over month decline, the fact that orders were up significantly from the April 2023 level indicates that the market is still solid,” noted Dan Moyer, senior analyst, commercial vehicles with FTR.
“The persistent stagnation in the freight markets has not deterred fleets from being willing to order new equipment. Order levels were below the historical average but remain in line with seasonal trends, and we still expect a replacement level of output by the end of 2024.”
ACT Research, for its part, agreed results were in line with expectations.
“With the long bottom in freight volumes and rates continuing in the most recent data from DAT amid lingering market overcapacity, carrier profitability as illustrated by the publicly traded for-hire carriers’ financial performance was dismal in Q1,” said Ken Vieth, ACT’s president and senior analyst. “Entering the historically worst time of the year for orders, at the bottom of on-highway tractor buyers’ profitability cycle, is producing results in line with expectations.”
Financial factors influencing truck demand
CMVC indicated in a recent report that financial factors are weighing on fleets’ abilities to add new Class 8 trucks. Fleets have adequate capacity in place to meet sluggish freight growth, the consultancy said in a news release, and will meet growing demand by improving utilization.
“A slow upward trend in fleet capacity utilization will gradually swing the pricing pendulum towards carriers from shippers, which will slowly improve profit margins, but CMVC does not expect this to occur until sometime in 2025,” the company said. “The focus for fleets in linehaul applications in 2024 is to increase truck utilization, improve operating efficiencies and to lower operating costs to improve profitability. This will weigh on truck sales to linehaul applications in 2024.”
Spot rates mixed
The week ended April 26 was fairly boring on the spot market, as rates are concerned. The latest data from Truckstop and FTR Transportation Intelligence showed spot rates moved with seasonal expectations; reefer rates rose while dry van rates pulled back.
Dry van rates fell to their lowest level in nearly a year, but refrigerated rates posted their sharpest gain since mid-January. The total market rates reached its lowest level in five weeks, but good news ahead – there is normally a spike in rates during the CVSA’s International Roadcheck event (coming May 14-16) as some sketchy operators prefer to park their trucks than undergo heightened enforcement scrutiny.
Since loads were down in the most recent week reported, and truck postings rose, the overall Market Demand Index fell to 64.3, its lowest level in nine weeks.
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