ACT Research: Pent-Up Equipment Demand Likely to Fade into Year End

On continued strong build rates and seasonally weak order volumes, the Class 8 backlog fell by 11,000 units to 152,600 units in August, according to ACT Research. At 5.3 months, the nominal backlog-to-build ratio is the lowest it’s been since fall 2020, as published in ACT Research’s latest State of the Industry: NA Classes 5-8 report.

“The Class 8 backlog is likely to turn higher in the near term as 2024 order season begins. The Classes 5-7 backlog fell 3,100 units to 113,900 units in August. The backlog-to-build ratio rose to 5.3 months from 4.7 in July on a lower daily build rate,” Kenny Vieth, president and senior analyst at ACT Research, said. “August is one of the weakest months of the year for Class 8 orders, as out-year orderboards are not typically fully open. While the tractor market appears under pressure heading into 2024 amid weak freight and falling carrier profits, vocational truck demand remains strong. August saw net orders up 3,900 units [month over month] to 19,500 units, with vocational trucks accounting for 42% of orders in August, well above the historical average around 29%.

“Even with an outperforming economy providing demand-side relief, freight markets continue to bounce along the cycle bottom, with for-hire demand muted as private fleets add capacity and insource freight. Pent-up equipment demand, especially for tractors, is likely to fade into year end, but build plans aren’t yet showing the effects of sharp declines in freight rates and carrier profits.”

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