Trailer orders dove in May, suggesting fleets are choosing to direct their limited capex budgets to power units ahead of EPA27 emission standards that will add about US$20,000 to the cost of a Class 8 truck.

The spot market on both sides of the border is showing signs of improvement as the market continues to correct. And for-hire truck tonnage saw strong gains in May.

Truck tonnage spiked in May

U.S. for-hire truck tonnage jumped 3.6% in May.

“May was the first month since February 2023 that tonnage increased both sequentially and from a year earlier,” said ATA Chief Economist Bob Costello. “While there was clearly an increase in freight before the Memorial Day holiday, it is still too early to say whether this is the start of a long-awaited recovery in the truck freight market.”

The index was up 1.5% year over year, which was the first such gain in 15 months.

Trailer orders sluggish

Trailer orders fell in May to weaker-than-expected numbers at 5,766 units, according to FTR. That’s down 56% from April and 14% year over year. The industry analyst also noted cancellations were high and sustained.

The backlog-to-build ratio fell to just 5.9 months, its second lowest level since 2020.

“Truck freight hasn’t entered a recovery yet despite occasional signs of improvement,” explained Dan Moyer, senior analyst – commercial vehicles with FTR.

“The softness is particularly reflected in this month’s lower orders in the dry van and refrigerated van segments, although reefer van orders are still up y/y for 2024 to date. Strength in the vocational market appears to be bolstering flatbed orders. With trailer orders surprising on the downside, backlogs continuing to decrease, and high trailer dealer inventory, build levels and rates will face increasing downside pressure as we continue through the slower summer order months.”

Jennifer McNealy, director – commercial vehicle market research and publications with ACT Research noted “Total cancellations again oscillated to the higher side of the pendulum’s arc in May. The cancellation rate rose to 3.2% of the backlog, from April’s 1.5% rate. Eight of 10 markets remained at or above the 1% mark, with OEMs indicating cancellations from multiple fleets and dealers.”

She suggested fleets are more inclined to spend limited capex on power units, with costly EPA27 emissions standards looming. With capacity remaining loose, fleets are also less motivated to increase trailer-to-tractor ratios.

Canada’s spot market improves

Loadlink indicated that load volumes on the spot market jumped 19% in May, which was also up 18% year over year, marking the second straight month of substantial y-o-y growth.

Those hauling freight on the spot market also saw a corresponding decrease in equipment postings, with the truck-to-load ratio falling 15% to 3.06 from April’s numbers. It’s now 24% lower year over year, showing signs of market improvement.

U.S. spot market improves, too

It was a similar story south of the border, with DAT Freight & Analytics indicating truckload rates bounced in May. Van and reefer volumes were up 4% from April, while flatbed volumes dipped 2%.

“Stronger van and reefer volumes are consistent with May, when shippers move seasonal produce and retail goods and truckload capacity tightens due to the Roadcheck inspection event and Memorial Day holiday,” said Ken Adamo, DAT chief of analytics. “Carrier attrition created further pressure on capacity.”

Reefer rates were up 9 cents per mile in May, while van rates edged up 2 cents.

As for the week ended June 14, Truckstop and FTR Transportation Intelligence reported stable numbers. Refrigerated and flatbed rates rose, while dry van rates eased marginally from the previous week.

If spot market rates hold steady, they’ll record their first year-over-year gain since 2022 in early July.