This story appears in the June 30 print edition of Transport Topics.
Trailer orders in May rose to the highest level for that month since 1998, continuing the strong growth trend that has been building this year, ACT Research reported.
Trailer buyers placed 22,308 net orders with U.S. manufacturers last month, a 52.2% increase compared with 14,655 in May 2013.
ACT analyst Frank Maly said constrained freight capacity is contributing to replacement purchases and fleet expansion.
“Things are still tight, and there’s still the need for equipment out there,” he said.
Year-to-date, orders are tracking 45.2% ahead of last year’s pace. Trailer makers booked a total of 133,665 new orders in the first five months of 2014, up from 92,050 in the same timeframe last year.
Fleets have more incentive to replace their oldest, least-reliable trailers when demand for their services is high, Maly said.
“When there’s tight capacity, you better be able to count on that equipment you have on the road,” he said. “There’s not a lot of flexibility there.”
Maly added, “We saw a noticeable change in fleet psyche as we entered the calendar year.”
Fleets were requesting a lot of quotes at the end of 2013 but finally started to place those orders once the calendar flipped, he said.
Although new orders rose on a year-over-year basis in May, they declined 15.6% from April’s total of 26,429. That decrease, however, was less pronounced than the typical seasonal drop-off, Maly said.
Similarly, analyst Rhem Wood of BB&T Capital Markets said in a June 23 note that the May order total was “seasonally very strong,” considering that the industry had exited the typical busy months for orders.
The overall growth in the trailer market has been driven by dry van orders, which have risen 64% year-to-date. Meanwhile, refrigerated trailer orders are up 38% through May, according to ACT’s data.
May order intake at Utility Trailer Manufacturing Co. nearly doubled from a year earlier, marketing director Larry Roland said.
“A slow-growth economic recovery continues to support the best May we have had in years,” he said.
The company’s backlog remains at a record level, and its scheduled production increases are nearing their goals, he said.
Great Dane Trailers also continues to see solid demand, said Chris Hammond, vice president of dealer and international sales.
Great Dane’s backlogs still are much stronger than at any time since the 2009 downturn, he said.
“All plants are managing a healthy backlog while we look at opportunities to increase production when possible,” he said.
Hammond said while order intake will slow during the summer months, it is a positive sign that customers already are asking about next year.
Brett Bartels, deputy general manager of sales and marketing strategy at Hyundai Translead, said his company’s customers have a “positive outlook” for the rest of 2014.
“At this time, we feel the industry may be in the beginning stage of placing orders for growth,” he said. “Previous months saw orders mainly for replacement purposes, not taking into account the actual growth of freight movement.”
Hyundai Translead’s backlog is about 63% higher than the same time last year, and the company continues to run at record production levels, Bartels said.
Likewise, May orders also were significantly higher than last year at Stoughton Trailers, said David Giesen, vice president of sales and marketing.
He said the strong order intake during the month bucked seasonal trends, a development that appeared to continue into June.
Stoughton’s backlogs still are at historic levels, and the company continues to hire to expand its manufacturing capacity, Giesen said.
He added that buyers who want to take delivery of new trailers any time this year or early next year realize they need to act soon since manufacturers’ order boards are filling up.
The industry backlog at end of May stood at 121,760 units, up 39% from the same time last year, ACT’s Maly said.
Cancellations of existing orders in May were “very low” at less than 2% of the new orders placed during the month, indicating that incoming orders have been solid commitments, he said.