SOUTHFIELD, Mich. – Net heavy truck orders have been above 20,000 since December, an indication trucking companies are doing more than just swapping out aging tractors for new ones.
Truckers need to buy about 20,000 vehicles a month just to replace older ones made by companies such as Navistar International and Paccar. North American net orders have averaged 21,619 a month since October and stayed above 20,000 since December. In February, net orders grew 3.4 percent to 22,816, the first such monthly gain in 14 months.
While still shy of a full-fledged rebound in the industry, investors see the early signs as reasons for optimism in an industry that is an economic bellwether.
Carriers are moving more automobiles and home construction equipment, helping drive demand for Class 8 tractors, the backbone of interstate hauling.
There is a lot of optimism out there, Kristine Kubacki, an analyst in St. Louis at Avondale Partners. Its really geared toward a back-half recovery.
Truck production has risen each of the past two years, it topped the typical replacement level of 250,000 in 2011 for the first time since 2006 after a fitful recovery from the recession-low of 120,000 in 2009.
New trucks are needed to replace aging models and to handle more goods as the economic recovery gains traction.
The American Trucking Associations truck tonnage index has risen 7.6 percent since October to the highest level since December 2011.
Forecasters initially expected new orders of 285,000 last year. It ended up at 273,036, after a sluggish economy slowed demand in the second half of the year, said Karen Ubelhart, an analyst with Bloomberg Industries.
Despite the positive signs, Class 8 shipments will fall about 12 percent to 240,719 this year, industry consultant FTR Associates forecasts. Class 8 retail sales fell 18 percent in the first quarter from a year earlier, according to a Bloomberg Industries report.
Orders are running at an annualized rate of 250,000 to 260,000, FTR said. Orders tend to run higher early in the year as freight haulers buy new trucks in advance of peak shipping demand in the summer, Eric Starks, FTRs president, said in an interview.
I expect orders to start moving down as we get into the summer, Starks said. If they hold up, thats a great thing, but I dont expect them to, based on traditional behavior. We need to see monthly orders above 25,000 to be really optimistic, but were just not seeing that right now.