WSJ: Logistics Report - US Heavy-Duty Truck Orders Soared 76% in February

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US Heavy-Duty Truck Orders Soared 76% in February

Analysts raise production targets for the year as strong shipping demand boosts outlook for truck makers

Trucking fleets are maintaining a strong pace for orders of big rigs as they bet that demand in the U.S. freight market will remain strong.

North American fleet owners last month ordered 40,200 Class 8 trucks, the vehicles used to haul goods long distances, a 76% jump compared to the same month in 2017, according to preliminary figures from freight analysts FTR.

Trucking companies that held back on deciding whether to upgrade or expand fleets in the fall, as freight demand accelerated, now are racing to reserve slots on production lines. Truck orders hit a nearly 12-year high in January, when freight prices soared as shippers scrambled to find capacity amid the tightest trucking market in years.


U.S. domestic shipping demand rose 12.5% year-over-year in January, according to the Cass Freight Index, a measure by freight payment company Cass Information Systems Inc. CASS 0.66% that tracks both road and rail shipments.

Although February orders fell back about 15% from January, order levels remained higher than in any month last year from October to December, the season when big fleets typically place the bulk of their orders. Last month was the eighth-best order month on record, according to ACT Research, which reported similar figures.

The orders are spread across fleets of all sizes, as carriers big and small move to take advantage of a forecast 4% increase in truckload freight in 2018, said Don Ake, FTR’s vice president of commercial vehicles. The firm has raised its 2018 production forecast to 330,000 vehicles, up from 320,000.

The figures point to a strong year for truck manufacturers, Stifel analyst Michael Baudendistel said in a research note Monday. “The only year where Class 8 production has ever been higher was 2006,” he wrote, when carriers buoyed by a strong economy were also rushing to buy trucks ahead of tightened emissions standards in 2007.

Shares of truck manufacturers Navistar International Corp. were up 4.4% to $37.65 in trading Monday afternoon while rival Paccar Inc. shares were up 1.5% at $68.20.

Strong demand is also boosting the fortunes of suppliers like engine-maker Cummins Inc. The company is projecting overall revenues to rise 4% to 8% this year, and investor relations chief Adam Schumm told an investment conference hosted by Barclays on Feb. 22 that the company expects 20% growth in the North American market for heavy-duty trucks.

Still, some transportation companies have been reporting trouble getting drivers behind the wheel of their new trucks as the operators grapple with a tight labor market.

Mr. Ake said one fleet he spoke with brought in 10 additional trucks in September, a million-dollar investment. “When I talked with him in November,” he said, “the trucks were sitting because they couldn’t find drivers.”