• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 47 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 10 days Does Toyota Know Something That We Don’t?
  • 4 days America should go after China but it should be done in a wise way.
  • 10 days World could get rid of Putin and Russia but nobody is bold enough
  • 3 mins "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 12 days China is using Chinese Names of Cities on their Border with Russia.
  • 24 mins The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 1 day Even Shell Agrees with Climate Change!
  • 2 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 3 days How Far Have We Really Gotten With Alternative Energy
  • 12 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 13 days Putin and Xi Bet on the Global South
Supply Chain Woes Could Derail Biden’s Electric Vehicle Agenda

Supply Chain Woes Could Derail Biden’s Electric Vehicle Agenda

The Biden administration's electric vehicle…

Warren Buffett Regrets Owning Electric Utilities

Warren Buffett Regrets Owning Electric Utilities

Buffett recognizes that the US…

Anti-Oil Activists Shift Focus to Insurers

Anti-Oil Activists Shift Focus to Insurers

Activists have also started attacking…

ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

New Truck Orders Defy Troubled Freight Market

  • Despite appearances, robust new truck orders don't indicate a healthy freight market, as many large and mid-sized fleets are merely replacing older trucks and capitalizing on the availability of drivers.
  • Supply chain disruptions and a strong retail truck market from 2020-2022 have led to a backlog in heavy-duty truck orders, driving the surge in new orders.
  • Truck manufacturers are aware of the freight market's recession and are not increasing production to offset the backlog, hoping to time the market for a potential rebound.

In the past week, several Twitter users have pointed to government data on retail sales of heavy-d

The context of their posts is that because of robust truck orders, the freight market must also be robust. And since the freight market is robust, they believe, it means that the U.S. economy is also robust. They have good reason for believing this. After all, new truck orders are at very high levels and, in a normal cycle, there is a correlation between robust truck orders and freight demand. 

However, FreightWaves readers likely know better. The freight market is not robust. In fact, it is one of the most difficult freight markets in recent years, with comparisons to the 2009 economy among some fleet executives

The Twitter posters can be forgiven. 

They are likely just pulling random data charts and drawing their conclusions with little to no freight industry experience and little context. 

But why are new truck orders robust?

COVID screwed up the heavy-duty production cycle

There is a backlog of heavy-duty truck orders. Therefore, the data is not telling us what some think it does. 

In a normal economy, the health of the freight market is correlated with new truck order data. Not this time. The collapse in the freight market is well-documented from a range of sources, including leading industry surveys and bank reports on nationwide freight expenditure.

New truck orders are continuing at robust levels, while the freight market collapses. This shouldn’t happen, so why is this cycle different? 

Mid-sized and large fleets — 100 trucks or more — buy their trucks at regular intervals, regardless of the economy. In fact, some increase purchases during recessions — thanks to incentives from original equipment manufacturers and easy access to drivers. 

Forty-two percent of the trucks on the road are held by fleets with more than 100 trucks. 

From 2020-2022, mid-sized and large fleets were not able to get new truck allotments due to supply chain shortages and a strong retail truck market.

The mid-size and large fleets also held on to trucks longer than usual — two years longer than normal. Some fleets delayed orders in 2020 because of the unprecedented uncertainty and then continued to hold off in 2021 because of the inability to find truck drivers to “seat their trucks.” 

Now, truck drivers are much easier to find, uncertainty about an “apocalypse” is long forgotten and those trucks they held onto for two extra years are worn out.

The largest fleets also know that with the availability of truck drivers (so long “shortage”), they will be able to grow market share. So what is occurring in truck order data is not related to robust freight demand, but rather a bulking of orders from the COVID economy among mid-sized and large fleets. 

ADVERTISEMENT

The OEMs are aware that the freight market is in recession. This is why they aren’t ramping up production to burn off the backlog. OEMs will keep production at current levels, hoping to time the cycle just in time for a rebound. 

It is possible that the truck OEMs will miss the recession this time around.

By Zerohedge.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News