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US Truck Capacity Still Climbing Toward Peak, Latest Data Show

01.08.16 | William B. Cassidy, JOC.com

Has U.S. truck capacity peaked? The latest round of truck orders indicates it has not.

Net orders for Class 8 heavy trucks rebounded in December, rising 70 percent from November after plunging 60 percent that month, according to transportation research firm FTR.

At 27,800 units, according to preliminary data, Class 8 net orders were still 36 percent lower than in December 2014, when stronger freight demand and an optimistic outlook had heavy truck orders pouring into manufacturers and “big iron” tractors flying off truck dealers lots.

North America Class 8 truck orders for 2014 equaled 375,000 units, the second highest order year in history, after 2004. Last year Class 8 orders totaled 284,000 units, FTR said.

The surge in orders in 2014 reflected increased motor carrier profitability and expectations for a ramp-up in demand. Those expectations fizzled in mid-2015, dampened by slower economic growth and inventory levels high enough to depress freight demand.

The influx of new Class 8 tractors pushed the JOC Truckload Capacity Index up 1.3 percentage points to 90.4 in the third quarter, the first index reading above 90 since the end of 2008.

Some carriers either cut or postponed orders in the fourth quarter, as expanding available truck capacity met declining freight demand. The preliminary December truck order numbers indicate the balance between supply and demand in the U.S. truck market is still in flux.

“The December orders show there is still solid demand for Class 8 trucks in 2016,” Don Ake, vice president of commercial vehicles at FTR, said in a statement. That solid demand will simply be softer than in 2014. In early 2016, capacity may settle into a balance, FTR said.

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