January Net Trailer Orders Drop 58% Following Year-End Surge

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U.S. trailer orders in January decreased 9% year-over-year to 24,300 from 26,595 a year earlier, reported ACT Research. This comes a month after net trailer orders reached their second-highest level on record at 57,300.

Also, orders dropped 58% from near-record results the prior month.

ACT Research noted that results reflect a lower build rate.

“Build-per-day decreased from the previous month’s unit-per-day rate,” said Jennifer McNealy, director of commercial vehicle market research at ACT Research. “OEM conversations continue to suggest supply chain constraints, including labor, are likely to remain a limiting factor to production in 2023.”

ACT Research: US Trailer Industry Already Committed Through Most of 2023https://t.co/TYVq4atera — ACT Research (@actresearch) February 20, 2023

McNealy had expected net orders to slow following the surge that ended 2022. She views the results as a return to more normal levels. ACT Research found that lower orders of van types and flatbeds were offset somewhat by increased placement for low-beds and tanks.

“Demand overall remains strong, and cancellations are low,” McNealy said. “But we are hearing that some orders are being made to replenish dealer stock, rather than going directly to fleet customers.”

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McNealy 

ACT Research noted that the backlog-to-build ratio increased to 9.9 months in January. It has been averaging roughly eight months since August 2021. But the ratio for total trailers decreased to 8.1 months when seasonally adjusted.

“While December numbers were record-level order numbers, we did see the numbers fall more into line in January,” said Chris Hammond, executive vice president of sales at Great Dane. “I don’t read much into any single month anymore as the last two or three years have made short-term indicators less relevant without a lot more context.”

Hammond believes fleets are continuing to order for replacement as they do not want their equipment to get out of balance because of age. He noted some fleets have held onto older trailers as capacity for new units was very constrained. He has seen some fleets ordering units for growth but that growth demand has waned recently.

“As economic clouds indicate a recession in upcoming months, we are seeing some boards of directors pull back capital in some segments; this will help other fleets get better access to trailer spots to alleviate their pressure,” Hammond said. “If the economy does enter a recession, we’ll likely still see trailer builds do well in 2023 as customers satisfy the overarching pent-up demand.”

Wabash issued guidance in its fourth-quarter earnings report that it is anticipating sales to be in the range of $2.8 billion to $3 billion for 2023. That includes multiyear orders with the trailer manufacturer strategically shifting toward long-term customers. The company announced a multiyear supply agreement with J.B. Hunt Transport Services on Jan. 10.

J.B. Hunt Transport Services ranks No. 4 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

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Yeagy 

“Wabash has undergone substantial change over the last two years to create the right organizational structure to enable this type of strategic progress,” Wabash CEO Brent Yeagy said Jan. 10. “The collaborative nature of multiyear demand planning builds upon our improved pricing construct to generate another important proof point of how we are structurally improving the foundation of our company by smoothing out demand cycles that drive unnecessary variability through the entire supply chain.”

Utility Trailer Manufacturing Co. is a semi-trailer truck dry van, flatbed and refrigerated van trailer manufacturing company based in City of Industry, Calif. The company reported that trailer orders remained strong in January. The refrigerated business was particularly robust with dry van remaining steady.

“We’re filling up dealer allocations and customer orders,” said Mark Glasgow, chief of sales at Utility Trailer Manufacturing. “I know there’s more shuffling going on in the overall marketplace by the looks of it, and there’s a lot of pundits that are talking about things slowing down. But in our order board to date we’ve not had that happen yet.”

Glasgow noted that input has remained extremely strong for the private carrier and specialized trailers businesses because of high pent-up demand. But the for-hire carrier side has also seen steady demand as fleets work to retain a decent fleet age. He noted the orders are solid through second quarter, and third quarter is filling up nicely.

“We’re finally getting production levels up to where we can keep pace with some of the replacement side and maybe some small growth,” Glasgow said. “I think that’s what keeps everything going pretty well right now. With all the supply chain challenges and the labor challenges through ’21 and ’22 that we’ve faced, we had more demand, but we just could not get the output. Now some of the supply chain issues are starting to correct themselves a little bit and we’re able to start getting a few more people back into the workforce so we’re going to be able to sustain a little higher production output.”