MAY 2023 DRIVING DATA
Key Observations From May's Reports
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“Even as the Class 8 market comes under increasing pressure, van trailer demand continues to enjoy secular support from the move to ‘power-only brokerage,’ which has big fleets and logistics companies looking to boost trailer to tractor ratios to bolster spot market productivity.”
-Kenny Vieth, President and Senior Analyst
N.A. Commercial Vehicle OUTLOOK
1. Economy - Warning signs of downside potential continue: high interest rates, an inverted yield curve, constrained credit, vulnerability in the financial sector, and unusually worrisome risk factors with which to contend (from Ukraine, to China, to the Mideast, to the Beltway, to the banking sector).
2. Medium Duty - The medium-duty market continued to struggle in April, with Classes 5-7 orders down 7% y/y to 18,453 units..
3. Class 8 - We are seeing clear softening in big fleet profitability and other metrics. We expect strong production and sales in the face of weak freight creation to exhaust pent-up demand in 2023, as lower freight rates, higher equipment and borrowing costs, improved equipment availability, and shrinking products put downward pressure on Class 8 demand overall.
4. Trailer - Following the record-breaking demand set at year end, combined with 2023 orderboards that are essentially filled, a pause in activity was expected.
5. Used Truck - Same dealer Class 8 retail truck sales continued their topsy-turvy run in March, jumping 18% m/m.
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N.A. Commercial Vehicle OUTLOOK?
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N.A. Commercial Vehicle OUTLOOK
Freight Forecast: U.S. Rate & Volume OUTLOOK
1. The shipments components of the Cass Freight Index® fell 2.4% y/y in April as freight markets remain muted and continue to work through an extended soft patch.
2. ACT Capacity Index ticked up by 0.6 points m/m to 53.6 in March, but still indicates slower growth.
3. Operating Authorities are declining at a record rate. There was a six-month period in 2009 with 3,300 net revocations, and 7,700 in three months in 2013. Those periods weren’t preceded by the same capacity additions as the past two years, but since October 2022, DOT has revoked a net 11,000 operating authorities. These exits are unlikely to let up until rates begin to rise.
4. Aggregated DAT contract rates were trending toward a 15% y/y decline.
5. US dry van truckload (TL) spot rates, net fuel, fell 6₵ m/m in April to $1.61 per mile, 5₵ below normal seasonality.
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Freight Forecast: U.S. Rate & Volume OUTLOOK?
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Freight Forecast: U.S. Rate & Volume OUTLOOK
State of the Industry: N.A. Classes 5-8 Vehicles
The Class 8 build rate in April was 1,384 upd, 6% above industry build plan. The industry produced 26,302 Class 8 units across April’s 19 production days. Classes 5-7 build averaged 1,192 upd, 13% above build plan. April’s build rate was the highest in nearly four years (since August 2019). The industry produced 22,650 units across April’s 19 build days.
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SOI: Classes 5-8?
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SOI: Classes 5-8
State of the Industry: U.S. Used Truck Classes 3-8
Used Class 8 retail volumes (same dealer sales) declined 23% m/m in April. Average mileage declined by 1%, with average price down 8% and age up 3%. Longer term, average volumes, price, and miles were lower, with age flat y/y. Same dealer Class 8 retail truck sales slowed in April, pulling back 23% from March. While sales normally decelerate in April, the decrease was greater than the expected 8-10%.
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SOI: Used Truck?
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SOI: Used Truck
State of the Industry: U.S. Trailers
During the past six months, trailer manufacturers and major suppliers have largely indicated stable business conditions as compared to each prior month. Responses for May, relative to April, were in line with this trend. That said, this month’s discussions indicated softer demand for 2024 and mixed concern regarding the supply of labor. The seasonally adjusted backlog-to-build ratio dropped 130 basis points m/m, to 6.9 months in April, from March’s 8.2-month level.
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SOI: U.S. Trailers?
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SOI: U.S. Trailers
