March Trailer Orders Soar 71.6%, ACT Says

This story appears in the May 5 print edition of Transport Topics.

Trailer orders surged 71.6% in March from a year earlier as freight growth, tight capacity and improving carrier profits continued to drive demand for new equipment, ACT Research reported.

U.S. trailer makers added 29,373 net orders to their logbooks in March, compared with 17,117 in the same month last year, ACT said.

In the first quarter, incoming orders totaled 85,088, a 53.5% jump compared with the first three months of 2013.

ACT analyst Frank Maly said fleets’ financial gains in the fourth quarter of last year helped support their willingness “to pull the trigger and make investment commitments as we crossed into 2014.”

He added: “Even with all the equipment that’s been sold over the past couple years, there are still a lot of old trailers out there that need to be replaced, and capacity is tight.”

While the March order total was down 1.9% from the 29,932 placed in February, it was still the sixth straight month above the 25,000 mark.

The recent orders surge was driven initially by large fleets ordering dry van and reefer trailers, but that growth since has expanded to other trailer categories, including flatbeds and tank trailers, Maly said.

Industry backlogs swelled to 118,000 units at the end of March, up 26% year-over-year, he said.

Manufacturers said they have boosted build rates to meet the rising demand from fleets moving to replenish and even expand their trailer fleets.

First-quarter order intake was “very strong” at Great Dane Trailers, said Chris Hammond, the company’s vice president of dealer and international sales.

“Across the board, we are seeing increased activity, which is leading to increased production rates at our plants,” he said. “Customers are optimistic and seem to have some pricing power, which is, in turn, allowing them to update the fleet and to add equipment.”

Wabash National Corp., the only publicly traded company among the major U.S. trailer manufacturers, said its first-quarter profit climbed 27.2% on demand for new equipment.

Quote and order activity remained strong throughout the quarter and continuing into April, CEO Dick Giromini said on the company’s April 29 earnings call.

The Lafayette, Indiana-based company posted net income of $7.3 million, or 10 cents a share, compared with $5.7 million, or 8 cents, in the same year-ago period. Revenue rose 10% to $358 million as the number of trailers shipped climbed to 9,900 from 8,600 a year earlier.

Wabash’s backlog further expanded during the quarter to $791 million, the highest level since 2000, representing more than six months of production, he said.

“We believe overall demand for trailers remains solid and significantly above replacement levels in 2014,” Giromini said. “Fleet age, customer profitability, used trailer values, regulatory compliance and access to financing all support the continued strong, longer-term demand environment.”

He also cited a “slowly strengthening” economy, “solid” truck tonnage and an improving rate environment as key drivers for the trailer market.

Wabash’s discussions with its customers indicated that carriers are “becoming more vocal and confident in their ability and intentions to seek rate increases going forward,” Giromini said.

Wabash said it expects to ship between 13,500 and 14,500 trailers in the second quarter, with full-year shipments projected at 47,000 to 50,000.

Utility Trailer Manufacturing Co. saw incoming orders climb in March compared with both February and a year ago, said Larry Roland, the company’s marketing director.

“Increased freight demands are creating the need for additional equipment as well as the continuation of the replacement cycles that are still catching up from the recession, dating back to 2006,” he said.

Other trailer makers also reported strengthening demand.

“We have the strongest backlog I think we’ve ever had,” said David Giesen, vice president of sales and marketing at Stoughton Trailers. “We are ramping up to meet this demand and adding some capacity in there to meet our backlog.”

But despite the growth in order activity in recent months, the scarcity of qualified drivers is holding some fleets back, he said.

“Fleets are saying they can’t fill their trucks, so they can’t buy trailers,” Giesen said. “The demand is out there for the trucking companies to grow a little bit, but sometimes they can’t grow.”

He said the economy continues to “just plug along,” but that consistency is giving fleets enough confidence to invest in new equipment.

Order intake at Hyundai Translead jumped 71% in March, said Glenn Harney, the company’s chief sales officer, noting the trailer maker is currently at record production.

During the six months from October through March, when order activity is typically strongest, industrywide orders climbed 22% from the same timeframe a year earlier, ACT’s Maly said.