Class 8 truck orders are trending lower as national tender rejection rates remain above 25% — a characteristic of an extremely tight freight market. At first glance, it appears that carriers have slowed their efforts adding capacity to the domestic trucking market, even though the data suggests that little has changed in terms of the aggregate need for adding more seated trucks.
Historically speaking, there is little data that would help explain why truck orders are declining in the current environment. The last large-scale capacity crunch that occurred just over two years ago had similar conditions for very different reasons but may offer some insight over what is about to happen next.
National capacity was extremely tight starting in the middle of 2017 and persisted into the back half of 2019. National rejection rates were not quite as high for as long as they have been, but Class 8 orders jumped beyond seasonal expectation in October of 2017, hitting over 28,000 orders versus 9,500 in October of 2016, according to ACT Research.
The current market is similar to the 2017-18 setup in the way that it followed what was considered by many to be a soft demand cycle for freight in 2016. The surprising resurgence of business investment and an active hurricane season pushed capacity to its limits and…