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July 17, 2020 1:00 PM, EDT

Trailer Makers Anticipate Rebound After Fleets Recover From Pandemic

Hyundai Translead manufacturing plantA Hyundai Translead manufacturing plant. Before the pandemic, the trailer manufacturer already was expecting the overall market to be down from last year. (Hyundai)

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The trailer industry — already on the downside of the economic cycle prior to the COVID-19 outbreak — was forced to make further production cuts and alter manufacturing processes as the pandemic took hold.

But if history repeats itself, the industry could be headed for a long upturn when the economy rebounds, said Sean Kenney, chief sales officer for Hyundai Translead.

Before the public health crisis, the trailer manufacturer already was expecting the overall market to be down as much as 20% from last year, Kenney said. Now, the company expects the market to fall further below those projections, although the situation is too fluid to make accurate forecasts.

When businesses began closing their doors to help prevent the spread of the virus, fleets whose markets would be significantly affected immediately moved to conserve cash, regardless of size.

“I think, overall, the customers are hitting the pause button on new-equipment needs for obvious reasons,” Kenney said. “The dry van folks are definitely in conserving-cash mode and making sure that they can weather the storm.”

He said sales to refrigerated carrier customers also were down before the pandemic. After years of growth, the market was due for a correction. During the pandemic, carriers serving closed venues such as ballparks have faced the biggest challenges.

Kenney said the last time sales were very low was in 2008 and 2009, and those down years preceded the industry’s longest rebound cycle. He said carriers see the current situation as a “pause in the action,” but customers were saying it could take as long as 24 months to return to the pre-COVID first quarter of this year.

“Nobody’s throwing their hands up, but they’re ready for a rather protracted return of freight and market,” Kenney said.

Like Hyundai Translead, Great Dane Trailers saw a change in customer behavior thanks to the pandemic.

While the “entire industry took a pause,” the pullback was strongest among food service carriers whose restaurant customers shut down, said Chris Hammond IV, executive vice president of sales.

Hammond said trailer customers believe business is on the upswing, but they’re concerned about the future.

“The customers I’ve spoken with felt like the bottom for trucking is now passing, and they expect their business to rise with the opening of the economy,” he said. “Of course, they all have concerns of another round of COVID-19 shutdowns and another slowdown that would come with that.”

Kevin Page, senior vice president for customer value creation

Page

While much uncer­tainty remains, Wabash National Corp. is prepared to do business “in any type of market that materializes,” said Kevin Page, senior vice president for customer value creation at the company.

“[Customers have] had to navigate fluctuations of being extremely busy when consumers cleared the shelves prior to state-mandated stay-at-home orders, to experiencing a considerable market softening with business closures, and now preparing for increased volumes as states reopen their economies,” he said.

Page said dealer inventory is higher than usual, and customers are closely managing capital expenditures. However, the company believes customers will want to maintain the average age of their trailers “at reasonable levels” for efficiency’s sake and to attract drivers.

Stoughton Trailers’ David Giesen, vice president of sales, said the company’s main fleet customers largely stayed the course on their equipment plans, though some did take a pause during the lockdown.

At East Manufacturing, Doug Kenney, director of national fleet sales, said many fleets in the platform market postponed purchases and some canceled or delayed production orders.

Altered Processes

In addition to sales, the pandemic has affected trailer manufacturers’ production processes.

Hyundai Translead’s two plants in Mexico closed only briefly to heavily sanitize the facilities, Sean Kenney said. Plants have doctors and nurses on staff, and employees travel on Hyundai shuttle buses, reducing their reliance on public transportation. Employees have been provided new masks each day and have had their temperatures taken daily, which has been tracked over time. Those running a fever can’t come to work. Social distancing is practiced when possible, with employees who work in close contact wearing face shields.

Sean Kenney, chief sales officer for Hyundai Translead

Kenney

Asked about layoffs, Kenney said, “We’ve had some rationalization of capacity for sure, but nothing on a mammoth scale.”

Kenney said the company has faced only minor issues obtaining parts from suppliers and has had no problem offering repairs through dealers and service providers. Asked if any long-term ­changes would occur in trailer designs as a result of the pandemic, he said his company’s trailers already come standard with antimicrobial lining technology, and it will evaluate other needs as they present themselves.

“At this point, I don’t know of any specific changes that we are planning or that our customers are asking for in response to COVID-19,” he said.

Great Dane

Great Dane cited a pullback in trailer demand for food service fleets serving restaurants that closed during the pandemic. (John Sommers II for Transport Topics)

At Great Dane, some employees have returned to the corporate offices in Savannah, Ga., Hammond said. Offices had been prepared with social distancing markings, and the company had insti­tuted limits on the number of people in various spaces. Employees were to have their temperatures checked each morning. The company’s parts and other facilities had all modified their processes to protect customers and employees.

Stoughton Trailers also made changes in its manufacturing processes. Employees’ temperatures have been screened at facility entrances, and the com­pany pro­vided a full-time on-site medical provider. An additional full-time cleaning team of 12 was created to disinfect facilities. Line work areas were reorganized to allow 6-foot separations, and start and break times were staggered to encourage social distancing. The company also established a ­COVID-­19 task force that meets daily.

David Giesen, vice president of sales for Stoughton

Giesen

“There have been challenges with child care, confusion with state orders and adapting to the new normal,” Giesen said. “But in the end, our workforce came through and continues to do so on a weekly basis. With all of the actions implemented by the company, we were able to keep the confidence of our workers that we have their best interest in mind.”

East Manufacturing ceased its operations for four weeks “out of an overabundance of caution to help protect our employees, their families and our customers,” Doug Kenney said.

“We restarted our production lines April 20, employing state-mandated social distancing and additional cleaning and sanitizing measures,” he said. “We have been able to increase production rates incrementally and are now operating at a capacity consistent with the current level of business.”

Trailer Demand

Fleets contacted for this ­story had altered their purchasing ­cycles but had made only rela­tively minor changes in their maintenance practices.

CFI, which operates 7,200 dry van trailers, typically orders about 700 trailers a year, but this year, it has an order for 200 over the next three to four months. It remains to be seen if the company will order more.

Randy Cornell, vice president of maintenance at CFI

Cornell

“We don’t want to overextend ourselves,” said Randy Cornell, vice president of maintenance. “We can buy trailers at any time. We don’t have to buy 700 a year. We can buy 200 this year, and we can buy a thousand next year if we want to. But we just want to make sure that we’re not overextending ourselves, and let’s kind of see what the economy’s going to do, and then we can adjust our plans up or down accordingly.”

Cornell said the company has made no changes to its trailer inspection checklist and maintenance practices. The company specs quality products — galvanized metal rather than painted, a composite floor rather than hardwood — and expects them to last. He said some repair shops have limited their hours and have smaller staffs, but it hasn’t been particularly challenging.

CFI is part of Montreal-­based TFI International, which ranks No. 11 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

The biggest effect flatbed carrier Maverick USA has experienced has been in acquiring already ordered trailers delayed by the closure of manufacturing facilities.

Vice President Mike Jeffress said trailer suppliers are making every effort to accelerate postponed deliveries. The used market is recessed, but Jeffress said the company believes that was the case before the pandemic.

Maverick USA Vice President Mike Jeffress

Maverick USA Vice President Mike Jeffress said trailer suppliers are accelerating postponed deliveries. (Maverick USA)

He said Maverick owns 2,200 trailers and typically has a purchasing cycle of 10 years, which it has not changed as a result of the pandemic.

Maverick, based in North Little Rock, Ark., and No. 76 on the for-hire TT100, has made other process changes, including making personal protective equipment available to team members and emphasizing disinfection in its standard repair times. It also has educated team members about how suppliers are being affected and about how service providers have implemented precautions to limit their own employees’ viral exposure.

Asked if any of these maintenance changes will outlive the pandemic and economic slowdown, Jeffress noted that while what is going on is important, the carrier won’t make any decision to change a new process due to the economy.

“Reverting back to old practice certainly wouldn’t support our mission of ‘Be part of the solution, not part of the problem,’” he said.

Royal Jones, owner of Mesilla Valley Transportation, which has 5,300 trailers, said his Las Cruces, N.M., company was not experiencing difficulties finding places to repair and wasn’t having a problem finding manufacturers ready to produce more.

“I imagine if you needed some right now, anybody would have you built by tomorrow,” he said. “Everybody’s dying for somebody to buy something new right now.”

Royal Jones, owner of Mesilla Valley Transportation

Royal Jones, owner of Mesilla Valley Transportation, said the company was not experiencing difficulties finding places to repair the fleet or manufacturers ready to produce more. (Mesilla Valley Transportation)

Jones said in March he was scrambling for empties every day in El Paso, Texas, the hub of his outbound freight. Then the pandemic hit, and in April he had 600 to 700 trailers sitting in El Paso and 200 to 300 in Laredo, Texas. He estimated his deadhead percentage in April reached 22% to 23% instead of its normal 7% to 8%. But the slowdown has given him a chance to perform extra maintenance.

“We didn’t think it was going to sit forever, so it actually gave us a chance to catch up on some of it to make sure we were up to date,” he said.

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MVT ranks No. 78 on the for-hire TT100.

Jeff Harris, vice president of maintenance for USA Truck, said the carrier also has taken steps to protect its drivers and technicians. Hand sanitizer, masks and latex gloves are available for drivers, and canned food and water are stocked so they’ll have something to eat on the road. Technicians also have access to personal protective equipment and are encouraged to wear masks when they leave their areas. Spots marked on the shop floor help them practice social distancing.

USA Truck, based in Van Buren, Ark., and No. 67 on the for-hire TT100, typically tries to replace its trailers every 10 years to avoid deterioration such as delamination, when the trailer bulges at the sides, Harris said.

The company hasn’t changed its trailer maintenance processes beyond cleaning high-touch points, the dolly crank handles and door handles on the back. The carrier, which has 5,500 trailers, also has not placed any orders on new trailers this year after replacing about 250 the year before.

“We’ve got room to do it. We just haven’t done it so far,” he said.

He later added, “Everybody’s been really tight since about the third quarter of 2019. You’ve really got to watch what your spend is.”

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