Successful Dealer reports August's new Class 8 orders above 52,000 for the second month in a row, breaking July's record. Fleets and other buyers are responding to red-hot demand for freight and the need to reserve build slots at maxed-out factories. Economic fundamentals look sound into early 2019, but it's the "reserve build slots" part that we find interesting.

We continue to be surprised by just how many more new trucks are required to meet current transportation needs and address the ELD impact. It would not be illogical to assume the order cancellation rate will increase later in 2019, as new truck deliveries catch up to actual needs and the build slot reservations are no longer needed.

More importantly to our niche of the industry, as new truck deliveries continue to increase and become closer to meeting fleets' needs, trade-ins will increase. We don't foresee a massive wave all at once, but we do expect a higher volume of used trucks entering the market goinig forward. Frankly, we're surprised this activity hasn't come to pass yet. We're looking at the 2nd Quarter of 2019 for any changes to become apparent. Why then? We won't have a completely clear picture of freight dynamics until then. The next couple of months will include a contentious midterm election, which traditionally suppresses activity to a degree. Then, winter weather will impact freight volume. Through all this, buyers will continue to receive their new trucks. So we'll regroup in the early 2nd Quarter to see where things stand. We expect a somewhat more normal market for used trucks at that point.

See the graph below for a look at how we see used truck values unfolding over the long term.