There was a healthy jump in Class 8 orders in November, but they still lagged 2023 numbers. Industry forecasters suggest the prospect of tariffs on goods imported from Canada and Mexico could drive further gains in order activity as fleets look to get ahead of related costs.
Reefer rates gave back recent gains in the most recent week on the spot market. And a new report says the linehaul pricing environment is now ‘neutral’ and improving freight demand will be needed to swing the pricing pendulum back into carriers’ favor.
Class 8 orders jump, potential tariffs could drive activity
Class 8 truck orders spiked in November, up 12% from October levels but still 7% down year over year, according to preliminary data from FTR.
The industry forecaster says orders exceeded seasonal expectations. At 33,500 units, they were above the average November order level of 30,393 units seen across the past seven years.
“Despite a sluggish freight market, fleets have continued to invest in new equipment, mainly at replacement demand levels so far in 2024. We expect a modest rise in November backlogs once the final Class 8 market data is released later this month,” said Dan Moyer, senior analyst of commercial vehicles.
“Meanwhile, the election potentially could begin affecting the commercial vehicle market in the near term. The solid month-over-month increase in net orders might reflect some fleets choosing to place orders following the conclusion of the November U.S. elections, but the election impact might not end there.”
He was referring to the Nov. 25 announcement by President-elect Donald Trump that tariffs would be imposed on imports from Canada and Mexico.
“More than 40% of Class 8 trucks built for the U.S. market currently are built in Mexico,” Moyer said.
“The announcement presents challenges for the commercial vehicle industry already grappling with preparations for 2027 U.S. EPA NOx regulations, further straining supply chains and costs. While the late-November announcement likely had minimal impact on orders for the month, orders over the next month or so could see a boost as fleets aim to pre-empt potential tariffs. If tariffs take effect in Q1 2025, OEMs may struggle to quickly ramp up production beforehand due to labor and supply chain constraints, especially during the slow production months of December to February. High Class 8 inventory levels could partially meet any surge in retail demand.”
ACT Research counted 37,200 Class 8 orders for the month.
“We are still in the early stages of the industry’s building of 2025 backlogs, but through November, seasonally strong orders have made little progress in closing the backlog gap compared to year-ago levels,” said Kenny Vieth, ACT’s president and senior analyst.
“While up from October, orders were 11% below last November’s performance.”
Regarding medium duty, he added, “MD Classes 5-7 orders continue their consistent, if slowly deflating, trajectory into historically elevated truck and bus backlogs. Preliminary November NA Classes 5-7 orders fell 30% year over year to 16,500 units, the third weakest net order tally of 2024.”
Spot market reefer rates give up gains
The U.S. spot market reflected seasonal trends for the week ended Nov. 29, with a 22% plunge in reefer rates after a ramp-up leading to the U.S. Thanksgiving holiday. That’s the largest weekly decrease since January 2023, reports Truckstop and FTR Transportation Intelligence.
The drop erased gains seen over the previous four weeks and pulls reefer rates back down to comparable 2023 rates.
Dry van and flatbed rates were up on the week.
“The mismatch of Thanksgiving in different weeks of the year was a much greater issue for volume,” Truckstop reported. “Total load activity was down 51% year over year, but comparing the 2023 and 2024 weeks that included Thanksgiving shows a 4.4% increase y/y. The year-over-year distortion also affects the Market Demand Index, which fell to 39.3 – the lowest level since last Thanksgiving. Although down sharply from the same week last year, the MDI was higher than it was during Thanksgiving week last year.”
Linehaul pricing environment ‘neutral’
Commercial Motor Vehicle Consulting (CMVC) reports “the rationalization process of excess capacity in linehaul applications is completed, resulting in a neutral pricing environment.”
For-hire carriers don’t have the pricing power to push rates higher, but shippers lack the power to reduce rates, CMVC reports. In such an environment, pressure remains on carriers to focus on cost reductions and to increase productivity.
When will the pricing pendulum swing back in carriers’ favor? CMVC says it depends and will be determined by freight demand and further capacity reductions.
“Inflation and high interest rates will continue to weigh on the freight environment in the near term,” the analyst says. “Inflationary pressures are easing and the Federal Reserve is loosening monetary policy resulting in a gradual downward trend in interest rates that will spur freight growth, but there is a lag in the economy’s response to changes in the macro-environment.”
CMVC doesn’t expect an EPA27 pre-buy to prompt carriers to add capacity, but rather reduce the age of their fleets and defer the higher costs of EPA27 trucks.
“An increase in new Class 8 truck sales related to the pre-buy while carriers keep capacity relatively stable would increase the supply of trucks on the used truck market putting downward pressure on used truck prices as used truck demand remains relatively stable due to the freight environment,” CMVC reported.
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