Class 8 orders doubled in September, as fleets began lining up for 2025 build slots. However, demand remains at replacement levels in the face of a freight market that continues to be stagnant.
The spot market revealed no surprises for the most recent week, with rates following seasonal trends. And a move to reduce internal trade barriers in Canada’s trucking industry, but is it enough?
Class 8 truck orders snap back in September
Class 8 truck orders more than doubled in September, according to FTR, reaching 30,000 units. That was still 4% off last September volumes.
The September tally falls in line with seasonal expectations, FTR notes. It represents a balanced order intake given the current stagnation in the freight market. Orders continue to come in at replacement level demand, FTR indicated.
“This month, OEMs saw positive market demand, though the magnitude of the month-over-month increases varied,” explained Dan Moyer, senior analyst, commercial vehicles.
“The vocational market considerably outperformed the conventional sector, driving most of the month-over-month improvement. Despite stagnant freight markets, fleets continue to invest in new equipment, albeit at replacement demand levels in 2024 to date. We expect a modest increase in September backlogs once the final Class 8 market data is released later this month. With inventory remaining near record levels, we also expect further downward pressure on build rates through the end of 2024.”
ACT Research reported 37,100 units, which would be 0.3% better than the same month last year. It had a more bullish take on the numbers.
“Class 8 orders jumped well above trend and seasonally elevated expectations in September,” said Kenny Vieth, ACT’s president and senior analyst. “Historically, September is the first month of stronger orders, as the OEMs open their order books to next year’s orders. As such, for the first time since March, seasonality lowers the monthly order volume. On a seasonally adjusted basis, Class 8 orders jumped 92% from August, to 35,200 units.”
Regarding medium duty, he added, “Medium-duty orders continued at range-bound levels on a very slowly declining trend.”
Spot rates mixed, as per seasonal expectations
Slight gains in dry van and flatbed rates on the U.S. spot market for the week ended Sept. 27 fell in line with seasonal expectations, report Truckstop and FTR.
Refrigerated rates slipped, as per normal for that calendar week. Spot rates remain negative year over year for all three segments, with dry van and flatbed reporting their weakest year-over-year comparisons in months.
A decrease in truck postings pushed the Market Demand Index up to 62.2, its highest reading in 10 weeks.
More carriers entering the U.S. market
The latest monthly economic report from Motive reveals new carrier registrations in the U.S. in August rose for the second straight month, climbing 4.3% from July levels. Carriers exiting the market also rose marginally, but those exits have slowed 52% year over year.
What to make of the looming U.S. election and its impact on freight? The biggest policy impacts will come from the winning candidate’s views on tariffs, Motive notes. A 10% increase to tariffs on goods imported from China, as proposed by Trump, would cause import volumes to immediately spike as retailers attempt to fast-track cargo before implementation.
Motive indicates the U.S. will continue to increasingly rely on Mexico as a key importer.
“Regardless of which new tariff policies go into effect, we expect Mexico’s powerful position in the global supply chain, as well as nearshoring, to continue to grow. We don’t believe the outcome of the presidential election will significantly impact the trucking industry in the short term and we predict the market will continue its current trajectory as we move into 2025,” Motive concluded.
And it cited Vieth of ACT Research, who has said: “The beauty of this industry is that the U.S. economy is entirely dependent on trucks and truck transportation. And regardless of who gets elected, we’re still going to be eating and drinking and buying clothes and cars and houses the day after the election. We are, as a group, in a very good industry. It’s like death, taxes, and distribution.”
On the homefront, more must be done to improve internal trade
Here in Canada, the feds have introduced a pilot program aimed at reducing internal trade barriers. It will allow participating provinces and territories to recognize each other’s trucking regulations to improve efficiency.
Initial regs would include rules around oversized vehicle signage, to facilitate the smoother movement of goods across provincial borders. The Canadian Federation of Independent Businesses (CFIB) welcomed the rules, noting the Canadian economy could grow by $200 billion annually through eliminating internal trade barriers.
The Canadian Chamber of Commerce also welcomed the step, but said more must be done.
“We should not need a free trade agreement just to do business in our own country, and it shouldn’t be easier to trade internationally than interprovincially,” it said in a statement.
“Trucking, which accounts for nearly 30% of Canada’s transportation sector, is one of the most flexible ways to move goods. The industry help drive our economy ahead, not only by getting goods in the hands of those who want them, but by creating new business opportunities.
Over time, different levels of government have introduced their own laws, rules, and requirements to address vehicular requirements in different ways. But trucking companies do not get to choose which rules they follow — they must comply with all of them, adding inefficiencies, costs, and administrative burdens. This makes trucking and trade more difficult, an ultimately, life more expensive in Canada. In an uncertain labor climate and a productivity crisis, it is crucial that all governments act swiftly to remove any barriers in their control.”
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