This is What Heavy-Truck Manufacturers Face After a 19-Month Order Collapse to Historic Lows

This is What Heavy-Truck Manufacturers Face After a 19-Month Order Collapse to Historic Lows from Wolf Street

“The recovery is expected to be slow and uneven. It has not started quite yet based on the weak Class 8 orders in May.”

By Wolf Richter for WOLF STREET.

The last three months have been catastrophic for segments of the trucking business, after an already tough period that started in late 2018. In May, orders for Class 8 trucks – the heavy trucks that haul much of the goods-based economy across the US – plunged 37% from the  low levels in May a year earlier, and by 81% from May two years ago, to 6,600 orders, according to estimates by FTR Transportation Intelligence today.

In April, orders for Class 8 trucks had collapsed by 73% to 4,000 units, the lowest in the data going back to 1996. In March, orders had plunged by 52% to 7,400 trucks, the lowest since 2010:

May was punctuated by the bankruptcy of Comcar Industries, operator of four trucking companies with about 950 employees, including 700 drivers: CCC Transportation, a bulk carrier, and CT Transportation, a flatbed carrier, both focused construction materials; CTL Transportation, a liquid bulk chemical transporter; and MCT Transportation, a refrigerated and dry van commodities carrier.

The privately owned company, whose largest shareholder was Pimco, plans to liquidate in bankruptcy court by selling off its trucking divisions, for which it had already lined up buyers.

In 2019, as a result of the sharp downturn in the freight business, declining mileage rates, and pressures from debt, hundreds of smaller trucking companies filed for bankruptcy. But Celadon’s chaotic collapse and bankruptcy in December that left some of its 3,000 drivers and 2,700 tractors stranded in North America marked the largest truckload-carrier bankruptcy in US history.

The May plunge in orders reduced the 12-month total of Class-8 orders to 155,000 trucks, down nearly 70% from the 12-month total at the peak through October 2018 of about 500,000 trucks.

This may be about as low as it’s going to get. Economic activity is starting to pick up from low levels, and freight volumes have bottomed out as well, though “fleets remain reluctant to order trucks,” FTR said in the emailed statement.

“The recovery is expected to be slow and uneven. It has not started quite yet based on the weak Class 8 orders in May,” FTR said.

“Most of the country still had some severe restraints in place for part of May. It is difficult for fleets to plan for future equipment needs under these highly abnormal conditions,” Don Ake, VP commercial vehicles, said in the statement.

“Carriers are more worried about what’s happening today, about their manpower needs and short-term issues, than ordering trucks. The concern about the pandemic goes beyond just the business and economic anxieties and greatly diminishes fleet confidence,” he said.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.