ACT Research Pulls Curtain on Backlog Calculations
If you have been following the truck industry for even a second since the coronavirus pandemic ended, there is a 99.9% chance that you have heard us or another player in the field use the word “backlog”. The simple fact of the matter is that truck building has always had a backlog, even in a time where all components are readily available, as Class 8 trucks take a long time to build. ACT Research has provided the public with its information on how it calculates the backlog and provides details for how large it has been over time.
Details
Did you know that in February 2023, 1,277 trucks were being built every day? This is an increase of 14% over February 2022 but a 7.6% decrease from January.
Using their found number of trucks manufactured every day and dividing it by the number of trucks still in demand, they find the backlog-to-build ratio, which determines the length of the average wait time at a given point.
This graph they have provided is confusing to digest, but we are here to help. The red and black line is the measurement of units in the backlog (with the red line being seasonally adjusted), measured in thousands by the left. Blue measures the number of months it would take at the production rate for the point in time to fulfill the backlog. The two lines move in the same direction to one another, with some exceptions: the demand for trucks at the start of the COVID-19 pandemic may have dropped significantly, but production came to a screeching halt.
As of the time of the last data point, February 2023, the seasonally-adjusted wait time was 7.8 months. This is lower than the average since the start of the decade but slightly higher than the average in the last twenty years, which hovered around six months.
Conclusion
With the backlog-to-build ratio at only half what it was at its highest, the backlog is showing signs of slowly but surely decreasing. While the backlog will always exist due to the lead time in manufacturing a truck, it is only a matter of time before the backlog reduces back down to a respectable five-and-a-half months, similar to what the industry has seen for the majority of the century-to-date.
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