Trucking Industry Update: A Surge in Reefer Rates and a Rise in Trailer Orders

Trucking Industry Update: A Surge in Reefer Rates and a Rise in Trailer Orders

As we navigate through the ever-evolving landscape of the trucking industry, it’s crucial to stay informed about the latest trends and developments. Recent findings from ACT Research shed light on some significant patterns: a spike in vocational demand driving Class 8 orders and a stable demand for trailers, despite a notable rise in cancellations.

The Latest on Trailer Orders

October witnessed a notable development in trailer orders. ACT Research reported preliminary net orders totaling 35,300 units, marking a decrease of 26% year over year but showing a slight increase from September. This movement signals a continuing positive momentum in the industry, although it’s too early to predict the trend for the entire year. Notably, cancellations, especially in platform and tank segments, remain high, with some specialty segments already booked until late 2024.

Class 8 Orders: The Vocational Demand Influence

In the realm of Class 8 orders, there’s been a 24% decrease year over year as of October. However, these orders are robust, relative to the current state of the freight market. The largest contributors to these orders are sectors with significant pent-up demand, particularly vocational trucks, which have seen a 24% surge in orders. This boost is partly attributed to the infrastructure spending from the U.S. Inflation Reduction Act. Interestingly, Class 8 tractor orders have dipped by 34% year over year, with a noted increase in inventory due to lower than expected build rates and a decline in retail sales.

The State of Freight Rates and Market Dynamics

The freight market has been experiencing a prolonged period of low rates, with little change in spot rates since April. A key factor in this trend is the delayed capacity additions by private fleets. These fleets, typically not the first in line for new equipment purchases, have been significant players in the Class 8 market in 2023, adding equipment at the cycle’s bottom and thereby extending the duration of low rates.

Van Trailer Demand: A Revised Outlook

Taking a comprehensive look at Class 8 trucks and trailers, ACT has adjusted its forecasts for dry van demand. This recalibration stems from a shift in expectations regarding power-only brokerage. The plan to integrate drop-and-hook productivity into the small carrier spot market by large fleets and brokerages initially boosted the trailer-to-tractor ratios and built trailer pools. This change was especially pronounced during the pandemic-driven stimulus and supply-chain constrained market. However, the spot market has seen a significant decline, with current postings averaging far less than the peak during the pandemic.

Looking Forward: A Cautious Optimism

Despite the challenges and fluctuations in the market, there’s a sense of cautious optimism. The industry has seen a solid start to the ‘order season,’ a period when OEMs open their order books for the upcoming year, typically leading to a spike in orders that extends into March. This strong start, despite weak freight fundamentals, is holding back deeper cuts in forecasts. ACT Research anticipates unique factors at play in 2024 that could support Class 8 demand even in the face of weak U.S. and Canadian tractor markets.

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