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July New Heavy-Duty Truck Orders Lowest Since 2010


New truck orders in July fell to their lowest level since 2010, more evidence that a trucking sector recession is taking hold.

FTR Transportation Intelligence reported preliminary orders of 9,800 units. That was down 82 percent from the same month last year when fleets rushed to secure build slots for new equipment in a robust economy.

ACT Research reported the preliminary July order number at 10,200, the lowest since February 2010. Adjusted for seasonal factors, 12,100 orders were placed, the lowest since October 2016.

Truck makers that opened order books in June and July found little interest. Historically, orders are placed in October and November.

"Wait and see"

"Fleets continue to take a wait-and-see approach to 2020 equipment," said Jonathan Starks, FTR chief intelligence officer. "Potentially higher equipment costs, uncertain demand and enough available capacity in the market are keeping order activity at bay."

The backlog from record orders placed in 2018 stood at about 188,000 at the end of June. Order cancellation rates remain within normal ranges. A softening economy and lower freight demand have led to seven trucking company closures so far this year.

"Order weakness is increasingly the story of an over-capacitized Class 8 fleet," said Kenny Vieth, ACT president.

Second-half forecasts

Daimler Trucks and Volvo Trucks leaders told analysts on second-quarter earnings calls they expect some second-half weakness that could lead to production cutbacks. By contrast, Paccar Inc., (NASDAQ: PCAR) parent of Kenworth and Peterbilt, said 36 percent of the industry orders in waiting belonged to its brands.

"From a 2020 order intake, I think that we're seeing a higher percentage than we do typically," Paccar CEO Preston Feight said on the July 23 call.

FTR said overall July orders were 24 percent below June. Class 8 orders for the past 12 months stand at 288,000 units. The industry took a record 458,000 orders in 2018.

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