Burgeoning Back Orders: Fleets Reluctant to Book New Trucks in October

Muted Class 8 truck orders in October were more about long lead times than soft orders.

For the fourth month in the last five, preliminary tractor orders fell below 28,000 as manufacturers struggled to complete trucks missing semiconductors and a host of other parts, pushing 2021 orders into the middle of next year.

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"With backlogs stretching into the second half of 2022 and still no clear visibility on the easing of the everything shortage, modest October order results suggest the OEMs are taking a more cautious approach," said Kenny Vieth, president and senior analyst at ACT Research.

ACT reported orders of 23,600 units. FTR Transportation Intelligence pegged orders at 24,500, down 12% from September and off 39% year-over-year. Rolling 12-month orders averaged 437,000 units, well beyond the industry's build capacity.

‘Tremendous difficulty planning production'

"The OEMs are having tremendous difficulty planning production for Q1," said Don Ake, FTR vice president of commercial vehicles

"The OEMs are using different methods in managing the backlog," he said. "Some are canceling 2021 orders and rebooking those orders in 2022, sometimes at higher prices, as commodity and other costs remain elevated. Others are only booking a limited number of orders every month."

The strain of matching production to orders only continues to grow as supply chain visibility — what parts will be available when — continues to worsen. 

"The OEMs are using different methods in managing the backlog. Some are canceling 2021 orders and rebooking those orders in 2022, sometimes at higher prices, as commodity and other costs remain elevated. Others are only booking a limited number of orders every month."

Don Ake, FTR transportation intelligence vice president of commercial vehicles

Publicly traded suppliers and manufacturers report some improvements followed by disruptions in other areas. The COVID pandemic shares blame with container shipment delays, a shortage of workers, and higher material and transportation costs.

"Semiconductors look like they have a longer-term capacity issue," Cummins Inc. Chairman and CEO Tom Linebarger said on the company's Q3 earnings call Tuesday. "The freight side of things seems like it's not quite getting better yet."

Production forecasts lowered

Cummins lowered its forecast for industrial production of heavy-duty trucks in North America to 228,000 units from its earlier guidance of 264,000 units. 

"This is again due to the supply chain constraints impacting our customers rather than a lack of end-user demand," Linebarger said. 

Paccar Inc. CEO Preston Feight was more upbeat on an Oct. 26 earnings call with analysts.

"We've started to come up with either reengineered solutions or alternate chips or brokered chips that allows us to start to recover some of the trucks in the fourth quarter," he said.

Still, the shortage of new trucks is leading to delivery delays of up to a year for some small fleets.

Global asset management and disposition company Ritchie Bros. reported an unused 2022 Kenworth T880 sold at its auction last week in Edmonton, Alberta, for $187,208. Used truck prices also are off the charts. At the same auction, a 2018 Freightliner 122SD tri-drive sleeper truck tractor sold for $133,254.

"Without the clogged supply chain, production would be significantly higher, and orders would be elevated also," Ake said.

Related articles:

Off pattern: September Class 8 truck orders align to supply shortage

Trailer orders ramp up in September, pushing existing bookings into 2022

Paccar delivers 7,000 fewer trucks in Q3 because of missing semiconductors

Click for more FreightWaves articles by Alan Adler

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