Class 8 orders were weak in February, down sharply both month over month and year over year.
Could it be that uncertainty over on-again, off-again tariffs are causing business investment to suffer? More details below.
Shippers are also feeling the pain, with conditions falling into negative territory in December. Meanwhile, it’s a mixed bag for the spot market – depending mostly on the type of freight you’re hauling.
Class 8 orders tank
Class 8 truck orders totaled just 17,000 units in February, down 31% from January and 38% year over year, according to preliminary data from FTR.
The tally was well below seasonal expectations and short of the seven-year February average of 26,912 orders. It appears business investment is being curtailed due to uncertainty around tariffs and trade.
“Significant U.S. tariffs could substantially increase costs for North American Class 8 trucks/tractors and related components. Approximately 45% of all Class 8 trucks built for the U.S. and Canadian markets will be subject to the 25% U.S. tariff on all imports from Canada and Mexico and planned Canadian counter-tariffs,” said Dan Moyer, senior analyst, commercial vehicles.
“About 40% of U.S. Class 8 trucks are produced in Mexico, and roughly 65% of Canada’s Class 8 trucks are assembled in the U.S. Even if those tariffs went away, others affecting costs include those on steel and aluminum, goods imported from China, and perhaps others coming down the pike.”
The dual threat of tariffs and looming EPA27 emissions-related cost increases appear to be giving fleets pause in replacing equipment and could disrupt traditional trade cycles, Moyer warned.
“OEMs and suppliers may consider shifting production to manage tariff exposure. However, these strategic changes remain costly, complex, and time-intensive, further complicating industry planning,” he added.
ACT Research reported slightly better numbers of 18,300 units.
“After the strong end to 2024, the past two months have largely been defined by trade and economic policy uncertainty, as the new administration has thrown a wrench into business planning,” said Carter Vieth, research analyst at ACT Research.
“Whether the slowdown in orders is a result of moderating economic activity or a response to the newfound uncertainty remains an open question. In February, Class 8 orders dropped 34% y/y to 18,300 units. Seasonally adjusted, Class 8 orders fell 28% from January to 16,700 units, the lowest seasonally adjusted reading in almost two years.”
Regarding medium duty, he added, “MD Classes 5-7 orders continued their slowly deflating trajectory into still historically elevated — if less so — truck and bus backlogs. ACT’s preliminary look at February NA Classes 5-7 orders puts the month’s volume at 17,100 orders, down 11% y/y.”
Shippers feeling the pinch, too
FTR’s Shippers Conditions Index fell to a negative reading of -1.8 in December, only the second such negative reading since August 2023. This compares to a 2.3 reading in November.
The industry forecaster blames stronger freight volumes and better capacity utilization.
“Market conditions for shippers likely will be volatile in the near term as the supply chain reacts to the plethora of tariff impositions and threats as well as similar measures such as the proposed port access fee related to China,” said FTR’s vice-president of trucking, Avery Vise.
“Our forecast for the SCI is slightly weaker than it was previously but generally not as weak as it was in December. Although we expect market conditions over the course of the year to be only slightly negative for shippers, that outlook probably is of little consolation for traffic managers having to navigate a chaotic business environment day to day and week to week.”
Van rates decline, flatdeck rates rise
The spot market for the week ended Feb. 28 saw dry van and reefer rates resume their seasonal declines after one week of increases.
Refrigerated rates reached their lowest level since April 2023, according to Truckstop and FTR Transportation Intelligence. Dry van rates were at the second lowest level since October, though higher year over year for the first week this year.
Flatbed rates jumped to their highest level since late July with volumes the strongest seen since July 2022.
“With the gain in load postings outpacing the increase in truck postings, the Market Demand Index rose to 85.4 – its strongest level in seven weeks – due principally to flatbed,” Truckstop reported.
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