[Stay on top of transportation news: Get TTNews in your inbox.]
U.S. trailer orders climbed again in July, reaching the highest point since November, and posted an 80% improvement over year-ago levels, ACT Research reported.
Orders reached 18,851 compared with 10,442 a year earlier when fleets were retrenching amid the onset of lower freight volumes and rates, according to ACT.
In July, with rates and freight volumes improving and the lessening impact of lockdowns resulting from the coronavirus pandemic, fleets decided they could place some orders, Frank Maly, director of commercial vehicle analysis at ACT, told Transport Topics.
“It’s kind of interesting we get that kind of volume increase in July, [over June’s 13,441]. July is usually the industry’s lowest order month of the year. In the discussions I’ve had [with trailer makers], everyone is saying the phones are busy and there has been an attitude change out there,” Maly told TT.
Some of that is delayed ordering from the shutdown months, he added.
He said orders have trailed production for 17 of the past 18 months, eroding the backlog.
“We did have an increase in backlog in the month of July. Some of that was order-related and some was related to lower production. I am getting indications that the normal July 4 downtime was extended by quite a few manufacturers to help stretch the order board,” Maly said.
FTR pegged trailer orders at 19,300.
“It seems like the trailer orders are following the truck side,” said Don Ake, vice president of commercial vehicles at FTR, referring to truck orders hitting the highest point of the year in July with 20,300, up 98% year-over-year.
“You have your larger fleets following their replacement cycles, which they paused in March through May. Now they are back,” he continued.
But Ake said those ordering trailers are not really catching up with what they missed. “They are just resuming. There is no reason to order more. We are still climbing out [of the recession].”
At the same time, part of the good news shadowing the demand is that there are indications trailer dealers have started to order again, he said. “That is one of those green-shoot things if you have smaller fleets picking up trailers from the dealer, it’s a good sign.”
The reason that dealer activity is important is that in March and April when the pandemic hit, “one of the problems was dealers were overstocked, and that was one of the reasons orders were so low,” he said.
Trailer makers were hopefully optimistic for the rest of the year.
Besides the upturn in dry van orders “reefers are showing more life, as well,” said Chris Hammond, executive vice president of sales at Great Dane.
“We believe that the industry will continue to improve in upcoming months. This is the first market cycle in over 40 years that went from top of a cycle immediately to the bottom of the next cycle. The market will continue to climb upwards in 2021. Our customers believe that to be true, and we do as well,” he said.
The trailer industry “cannot be held down for long,” said Craig Bennett, senior vice president of sales at Utility Manufacturing Co.
“We are hiring back in most factories now and are only able to bring about two-thirds of our past employees back. [There are] many issues,” he said. He pointed to concern for safety in the workplace as one, as well as home issues and other factors.
Transport Topics introduces its newest digital interview series, Newsmakers, aimed at helping leaders in trucking and freight transportation navigate turbulent times. Audience members will gain access to the industry's leading expert in their particular field and the thoughtful moderation of a Transport Topics journalist. Our second episode — "The Evolution of Electric Trucks" — featured Nikola founder and executive chairman Trevor Milton. To view the replay, complete this form.
David Giesen, vice president of sales at Stoughton, called July’s volume a shot in the arm.
“So far the suppliers are responding in a positive way to meet demand. 2020 is looking pretty good, with 2021 yet to be determined. It seems to be less of a COVID-19 concern issue and more about the uncertainty of the upcoming election.”
While July’s markedly improved demand was positive, “equally positive was the reduction in volatility of the backlog overall,” said Sean Kenney, chief sales officer at Hyundai Translead.
“The broader supply chain has executed remarkably well through all we have faced as an industry and continues to be very responsive to the changing needs of the trailer makers,” he said. “At this point we remain hopeful that the recent improvement is sustainable for the remainder of the year and have our sights set forward on a successful 2021.”
Want more news? Listen to today's daily briefing: