June Trailer Orders Drop 59% Year-Over-Year
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U.S. trailer orders continued the trend of year-over-year declines with a large drop in June, according to data released by ACT Research.
Preliminary data show orders decreased 58.8% year-over-year to 6,300 from 15,300, ACT reported. Orders also fell by about 30.8% sequentially compared with the prior month’s preliminary total of 9,100 units. Every month has experienced a year-over-year decline since closing out 2022 at the second-highest level on record.
“Seasonal expectations suggest orders are likely to remain soft the coming few months, particularly given near-record-level order backlogs,” said Jennifer McNealy, director of commercial vehicle market research and publications at ACT Research. “Trailer manufacturers normally spend midyear working down the backlog ahead of the next year’s full order board opening.”
McNealy added net orders reached their lowest point so far this year. But she noted that is to be expected since order boards for next year could be opening soon. She also pointed out that there has been an increase in cancellations because of dealer stocking issues.
“I would say that talking to truckers and carriers, there’s certainly a sense of panic,” said Brandon Lairsen, vice president of trailer leasing at Transport Enterprise Leasing. “We really look at what industry segments are strong and where that’s going, knowing that whatever dip we’ve got, as these cycles happen, will not be long-lived. We expect that by the end of this year, beginning of next year, we’ll start to see a rise.”
Lairsen continues to see companies shedding equipment. He noted that they have been able to release short-term rentals that they’re not bound to or leases that have expired to level back out to fleet sizes that better match their business levels.
“I also think that a lot of businesses are waiting to see where equipment prices level out,” Lairsen said. “We’ve flipped over to where now we’ve got excess capacity, and demand is not there. So if somebody needs to go get equipment, they can run over and rent trailers from any of the trailer leasing companies right now.
“Everybody has inventory available. There’s hesitation to make long-term commitments or make buying decisions right now.”
Lairsen noted one of the reasons for the hesitation is trailer prices have dropped steadily throughout the year. He suspects that trend will continue throughout the end of the year and then level out to a more normalized figure.
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“As we’re talking to manufacturers, shippers, the distributors, they’re still very much in their same cycle of planning,” Lairsen said. “They haven’t really changed their asset procurement strategies. They’re still in lockstep with the cadence that they’ve been. And yes, they’re looking for, obviously, where can we save on equipment.”
He is waiting to see what happens with trailer orders when peak shipping season starts. Lairsen indicated that it would be interesting to see how much of the available idle inventory gets picked up for that. He added it will be a good indicator as to where the market is heading.
[July Preliminary Trailer Update] - Preliminary net trailer orders fall, cancellations elevated but 24' book opening.
Get the preliminary update https://t.co/YPNc53Oy56#Trailers, #Transportation, #truck, #trucking, #ACT, #ACTResearch pic.twitter.com/vtfiqPO3rg — ACT Research (@actresearch) July 19, 2023
“June orders naturally slowed a bit in most segments, as the summertime planning for the new year is well underway at Great Dane and with our fleets,” said Chris Hammond, executive vice president of sales at Great Dane. “We are still a couple of weeks away from turning on the new year, and we are filling the last of the open spots for 2023. As with any cycle, we are seeing some spot rate fleets slow down and even exit the market. This was expected, and we think the trend will affect dry freight through the summer.”
Stoughton Trailers Vice President of Sales David Giesen agreed with the point by noting intakes are typically slower in June. He added that tends to be true across the summer months but that this year also has full backlogs, leaving little room to take more orders.
“We actually have not opened for next year yet,” Giesen said. “But we’re getting closer to that. The issue you have to get past is getting pricing for components and supplies and making your guesses before you can try and quote. We’re getting closer to that for next year.”
Giesen noted the bigger carriers still want lots of trailers, while some of the smaller players seem to be taking a pause. But overall, he believes the trailer market is close to returning to normal.
“It’ll start picking up again in the next month or two as people start opening up and filling their first quarter of 2024 slots,” Giesen said. “It’s hard to say exactly when that happens. I don’t know if you’ll see those numbers in July already or it’ll be August. Somewhere in the next couple of months, we should start seeing intake go up again as first quarter starts booking.”
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