July Trailer Orders Rise 0.2% as Fleets Remain Cautious

This story appears in the Sept. 3 print edition of Transport Topics.

Orders for new trailers rose a slight 0.2% in July from a year earlier to 13,339, ACT Research reported.

Although orders have increased year-over-year in 16 of the past 19 months, they are down 3.2% to 128,144 through the first seven months of 2012.

The July total also was 2% below the 13,615 order tally for June, ACT said.

“We’ve certainly seen some softness on the orders side over the last few months, both truck and trailer,” said Frank Maly, director of commercial vehicle transportation analysis at ACT. “There’s some uncertainty out there in the marketplace. Fleets are being very cautious on their investments.”

That caution reflects a “wait-and-see” attitude on the economy, the elections in November and fuel prices, Maly said.

Several trailer manufacturers shared similar sentiments.

“I do think the election has some folks on the sideline, but we are still seeing a lot of interest in upgrading of the fleets,” said Chris Hammond, vice president of dealer sales at Great Dane Trailers, Savannah, Ga.

“We are experiencing some of the usual ‘summer doldrums’ and there is uncertainty stemming from the slowing global and domestic economic activity,” said Jeff Bennett, vice president of engineering at Utility Trailer Manufacturing Co., City of Industry, Calif. “That, coupled with rising fuel costs, indicates trailer demand will not be growing substantially,” he said.

Hammond added that refrigerated fleets are still analyzing new reefer units because new Environmental Protection Agency emissions standards take effect on Jan. 1.

“I still am very optimistic about next year. [Flatbeds] are really picking up, vans are good. Truckload reefers have slowed some,” Hammond said.

Mike Cobb, sales manager at Vanguard National Trailer Corp., Monon, Ind., noted that because 2013 vendor pricing from suspension and tire makers isn’t yet available, many potential trailer buyers are waiting until they see what their costs will be.

“It seems that right now, everyone is getting in line and we’re seeing large customers come in for business,” Cobb said.

But until firm pricing appears, would-be buyers will hold back placing orders, he added.

“This is the usual summer slow period,” said David Giesen, vice president of sales and marketing at Stoughton Trailers LLC., Stoughton, Wis. “We are still seeing good quote and order activity, relative to the season.”

Maly noted that most trailer buyers are keeping their existing orders on the books.

“Fleets are holding their existing commitments, but they’re not willing to significantly expand that into the future,” he said.

In July, the rate of cancellations stood at 1.2% of manufacturers’ backlogs, down from 1.8% in June, according to ACT.

Cancellations had risen in May, Maly said, “but not to a point of major concern.”

The recent uptick was driven by cancellations of liquid and dry bulk trailers, coinciding with “the market adjusting to the changes going on in energy exploration expenditures,” Maly said.

At the end of July, manufacturers’ backlogs stood at 92,214, down from 97,935 at the end of June.

That decline was “quite typical” for the summer season, when manufacturers tend to work down the backlogs built up during the spring, Maly said.

“We should start to see order intake kicking up around the September, October timeframe,” he added. “That’s our normal pickup time for the industry.”

Utility’s Bennett said some of that increase already has begun.

“Utility is still doing well, meaning that we are up from last year’s production rates and up from earlier in the year,” he said.

Utility also announced that it is planning to open a 22,000-square-foot expansion at its Paragould, Ark., dry van plant in September. It is also constructing a 50,000-square-foot modification center for high option and complex refrigerated trailers at its Marion, Va., plant.

“We are expanding our production facilities to meet demand and improve our labor efficiency and increase production throughout,” he said. “Even if trailer demand continues to slip, these expansions are still necessary to meet our goals.”

Wabash National Corp. and Hyundai Translead declined comment.