Industry forecasters are sounding the alarms on bloated truck inventories. Both heavy-duty and medium-duty truck lots are filling up, which could potentially put pressure on OEMs to curtail production.
No one wants to do that ahead of a probable pre-buy, which could see fleets filling order boards ahead of 2027 when ever-tighter emissions standards are expected to add US$25,000 or more to the cost of a new Class 8 truck.
The latest spot market rates data disappointed, particularly for refrigerated carriers. But flatdeckers finally saw a week over week increase in rates ending a 12-week slide.
Bloated inventories a concern for truck makers
ACT Research has reported in its latest North American Commercial Vehicle Outlook that there’s currently a rare “immediacy in industry data.” It’s referring to growing commercial truck inventories that have pushed backlogs to multi-year lows.
ACT says “order season”, which is now upon us, “has not been so important since the fall of 2016.”
“A year ago, the total Class 8 inventory was 61,800 units. At the end July 2024, the Class 8 inventory was a record 88,800 units, an increase of 27,000 units year over year,” said Kenny Vieth, ACT’s president and senior analyst.
“The increase has not been supported by demand, pushing stocks significantly above an inventory-to-retail sales inferred level. The same exercise works in the medium-duty market as well. From a near-record 77,800 units in July 2023, July 2024-ending stocks had risen to a new record 101,900 units, an increase of 24,100 units year over year.”
He added: “We are sitting in the lull before a hoped-for sustained surge as ‘order season’ gets underway. September is the month in which seasonal factors flip from accretive to dilutive, though September’s factors are modest. The ‘season’ gets underway in earnest starting in October. While inventories are ultimately a headwind, the path of orders is foundational at this juncture: backlogs are low, and backlog/build ratios for Class 8 and trailers indicate unsustainable production levels relative to backlog support. Strong orders in Q4 and into Q1 are imperative.”
Post-Labor Day spot market rates disappoint
The week ended Sept. 6 showed weaker spot rates than usual for van equipment, according to the latest data from Truckstop and FTR Transportation Intelligence. The drop in refrigerated rates was the largest for the comparable week since at least 2008.
While the drop in dry van rates was less severe, it was still the largest for a Labor Day week since 2014. Good news for flatdeckers – rates rose week over week for the first time in 12 weeks.
Load volumes were down sharply, as per normal for a holiday week, but truck postings dropped even more which pushed the Market Demand Index to 59.4, its best reading in the five weeks, the companies announced.
FTR Transportation Conference highlights
One of my favorite industry conferences of the year to cover is FTR’s annual Transportation Conference. It’s two days of jam-packed sessions on the economy, freight conditions, equipment outlooks, and fleet strategy.
That’s followed by two more days of similar talks about the rail industry, which I didn’t stick around for. At any rate, if you missed any of our coverage, below are some highlights from this year’s event:
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