January US Trailer Orders Retreat; OEMs Work Off Lengthy Backlogs

U.S. trailer orders in January dropped more than 40% compared with a strong period a year earlier, reflecting large fleets already having placed orders in 2015 to secure scarce production slots in 2016, research firms said.

ACT Research pegged orders at 17,157, down 43% from 29,892 a year earlier.

“The percentage [decline] kind of got people’s attention, but we did have an awfully strong January last year. And trailers [orders] continue to hold up better than [Class 8] power, well above a 2-1 ratio on a three-month rolling average,” ACT analyst Frank Maly told Transport Topics.

Research firm FTR reported January orders at 17,900, down 37% from a year earlier.

“Most large fleets have their orders in for the first half of the year. There are not many open build slots left,” FTR analyst Don Ake said.

He said backlogs for vans now are very robust, “so even if there are several weak order months, production should hold steady the first half of 2016.”

Ake said FTR was forecasting the trailer market to “soften slightly” in the second half of the year.

“Our 2016 forecast is a 9% drop for all segments in total” compared with the near-peak year of 2015, he told TT.

Maly said he began to hear some concern in the past month over the strength of orders by small and medium fleets. “But it was more concerns over a slowdown at the dealer level. They are really more the dealer customer bases.”

Ake noted January’s orders put dry van orders at the lowest they have been since May 2015, and flatbed orders also came in weak.

Trailer makers, though, said they were confident January’s decline illustrated only the strength of current backlogs and production.

“Monthly trailer orders as a metric can be very misleading,” said Charles Willmott, chief sales officer at the Strick Group, “and this January’s number is no exception.”

Willmott said orders are down because “trailer OEM factories are already mostly booked for the year from orders written last year, not because of any dire foreshadowing of a downturn in the market or general economy.”

“To be sure, elements of the economy are stagnant or suffering both domestically and globally,” he said, “but the North American van trailer market is alive, well and, to be honest, robust.”

Glenn Harney, chief sales officer at Hyundai Translead, said he wished he could lend an “exciting slant” to the situation, but “January turned out just about the way we expected.”

Harney said orders slowed as the trailer maker’s 2016 backlog already extended into the third quarter.

“Quoting activity remains at a high level, so we are optimistic that the backlog will continue to stretch out at least two [more] quarters,” he said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, told TT he had not yet reviewed the overall industry numbers.

“I will say we at Stoughton had a normal month for order intake from a historical level,” he added. “Our backlog is still very solid and strong.”

Dick Giromini, CEO at Wabash National Corp., the only publicly traded trailer maker, was confident about the year ahead, having a backlog of $1.2 billion on the books.

He referred to January’s kickoff as neither surprising nor unexpected.

Slots in 2015 quickly disappeared, he said, based on strong demand dating to 2014, the peak year for orders.

“This left many fleets requesting to place orders for 2016 build slots earlier in 2015 than ever before, with most manufacturers opening their order books in midyear 2015, or earlier in some cases,” he said.

“More than 180,000 trailers were ordered during the final six months of 2015,” Giromini added, “and, despite strong build levels throughout the period, backlogs continued to grow and stood in excess of 188,000 units at the end of the year.”

David Gilliland, vice president of national accounts at Great Dane Trailers, said the company’s van backlog and lead times remain strong.

“Having received orders for 2016 in the third and fourth quarters [of 2015] leveled out the buys for December and January,” he said.

Looking ahead, Strick’s Willmott said trailer makers will open up more slots when they better understand what direction prices for raw materials will take.

“We really don’t know how to price out past 2016 because we don’t know what is going to happen to the cost of materials and components that far in the future,” Willmott said. “We can hedge some items, but not all, and the further out you go, the more risk there is in setting a fixed price with our customers.”

Maly, however, said he has heard some discussion that one trailer maker already was taking orders for 2017.

Other trailer makers did not respond by press time.