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February 20, 2019 10:15 AM, EST

January Trailer Orders Fall 35%, but Extend Record Backlog

Stoughton trailer Stoughton Trailers

U.S. trailer orders in January reached 25,800, down 35% from very strong results a year earlier, according to ACT Research Co., citing preliminary data.

A year earlier, trailer orders were 39,752, making it the fourth-highest monthly total in a year that resulted in 420,000 orders — an all-time record.

The research firm FTR pegged preliminary net orders at 26,300.

“It is good news that they are still at 26,000” amid negative economic numbers, articles and opinions, said Don Ake, FTR’s vice president of commercial vehicles. “There is nothing to worry about in the short term.”

Fleet orders continue to mount amid production slots that are filled far into the year, trailer makers told Transport Topics.

January was the third consecutive month that the industry posted an all-time record backlog, although the pace of improvement is beginning to wane, according to ACT.

Hyundai Translead is committing production slots to its dealers and trusted repeat customers, said Stuart James, the chief sales officer.

He said anecdotal comments show current demand is to cover growth, “or at least a change in the ratio of trailers to tractors. Consumer expectations for almost immediate delivery places a new emphasis on time, further exacerbated by the driver shortage and ELDs.”

Customers with slots have production and delivery aligned to their original requests, James said. For others, Hyundai commits to the first quarter of 2020 but is making a good-faith effort to supply in fourth quarter. “Currently, however, that could only happen if there were cancellations in [the fourth quarter].”

As for a downturn just over the horizon, “No one wants to be the guy who didn’t see it coming, but really I don’t see it coming,” he added. “Leading indicators remain good even if down a bit from their previous highs. The backlog is long and with reliable partners, and we actually haven’t seen any cancellations of significance.”

Cancellations in January were just above 2,800 and about 2,100 of those were dry vans, said Frank Maly, ACT’s director of commercial vehicle transportation analysis. “We look at [cancellations] as a percentage of the backlog. Industrywide that is at 247,000 and almost 170,000 of that backlog is dry van.”

The puts cancellations at 1.1% industrywide and 1.2% on the dry van side, he said. “Neither of those numbers are a major concern.”

At Utility Trailer Manufacturing Co. the speculative orders are a higher percentage of its backlog than normal, “but still moving through the system well,” said Craig Bennett, senior vice president of sales.

Flatbed sales have moderated already and incoming orders have slowed, he said, but “we are building all the dry vans our plants can produce and that we can get materials for. Our business in dry vans and refrigerated is very strong and shows no signs of letting up, yet.”

At Stoughton Trailers, to meet growing demand it is adding new branches at Stoughton Lease, whose latest facility opened in Atlanta, said David Giesen, vice president of sales at Stoughton Trailers.

“Typically the first trailers turned in from any trucking company are their rental trailers. They are the higher variable-cost trailers they have,” Giesen said. “So the health of those rental and leasing companies does give you a barometer on if the industry slowing down or picking up.”

Stoughton’s rental business is just about 100% utilized, he added. “It’s in the high 90s. That’s one reason I say demand remains strong.”

At the same time, a very large fleet just placed their 2019 official order in February with Stoughton, he said.

“We just opened up our third quarter for orders. With the specific orders we have taken we are not concerned with our backlog,” Giesen said.

At trailer maker Strick, lead times stretch out more than a year and its quote volume remains high, said Jon Karel, vice president of national accounts.

“While we do not focus on the truckload carrier as our core business, the less-than-truckload and private customized fleet orders remain unwavering,” he said. If Strick customers were to place an order now, Karel said, “fleets are looking at mid-2020 for any kind of volume.”

Todd Anderson, vice president of sales at Fontaine Heavy Haul, said there is a lot of optimism among customers that the heavy-haul market is going to continue to stay strong.

Cancellations are not an issue, he added, noting there had been one instance of a “handful of cancellations that was really due more to over-speculation than a market slowdown.”

Fontaine is a unit of the Marmon Highway Technologies/Berkshire Hathaway Co.