U.S. Trailer Orders Surge 237% Despite Seasonal Slowness

A welder on a Stoughton Trailers production line. (Stoughton Trailers)

U.S. trailer orders came in well above prior-year results, rising 237% despite the historically slower conditions expected for May.

ACT Research reported preliminary net data showing orders surged over tepid prior-year results to 20,700 units. They also were 7% above April. The report noted that a sequential drop in net orders typically is expected, with May traditionally marking the second-weakest order month of the annual cycle. But ACT also suspects the current cycle has been delayed a few months.

“The order upticks that should have started in September or October of last year didn’t actually begin until December, but now may be buttressed by the rising freight rates,” said Jennifer McNealy, director of commercial vehicle market research for ACT. “The order upticks certainly are welcome, but caution remains a strategy for some trailer purchasers.”

In its last two reports, ACT Research has questioned whether more high-side surprises in order intake would happen, or whether traditional Q2 order weakness would prevail, given accelerating freight rates and rising carrier confidence. But this also came as fleet decision-makers continued to hesitate about placing trailer orders while accelerating tractor purchases.

“Based on the May data, we now know there was at least one more month of improved order intake in the pipeline,” McNealy said. “But it remains to be seen how the final month of Q2, as well as how Q3, will unfold.”

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(ACT Research)

FTR Transportation Intelligence reported preliminary results that showed trailer orders increased 249% year over year to 20,189 units. They were also up 1% from the prior month. The report echoed the point that prior-year results were much weaker. They were also far above the 10-year average of 11,649, indicating better-than-seasonal momentum going into late spring.

“The market still does not appear to be entering a broad-based upcycle, especially with seasonally slower order months approaching,” said Dan Moyer, senior analyst of commercial vehicles at FTR. “Rather than widespread capacity expansion, demand remains concentrated in replacement activity, fleet-specific needs and dry van normalization.”

Moyer added that these results were bolstered by solid flatbed demand. But he also pointed out that cost pressures are building, reflected in the sharp increase in the already elevated Producer Price Index for truck trailers and chassis.

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(FTR Transportation Intelligence) 

“A recent change in how Section 232 tariffs are applied means higher overall tariffs on trailers, and upcoming antidumping/countervailing duty exposure for van-type trailers and subassemblies could add more costs on top of Section 232 tariffs,” Moyer said. “This situation may create opportunities for domestic manufacturers and suppliers.”

Moyer added that those opportunities could also tighten build slots, extend lead times and strain the supply of components or labor. The result could be firmer domestic pricing and less consistent order flow, he noted, even without a broad increase in underlying trailer demand.

“May was a solid month for us from a leasing perspective,” said Brandon Lairsen, vice president of trailer leasing at Transport Enterprise Leasing. “But it feels like capacity is tight even though freight demand isn’t necessarily booming.”

Lairsen views this as a testament to how strong replacement demand has been. He noted the peak of the last trailer market cycle produced many trailers around 2015. Those trailers have started to age out, with many still needing to be replaced regardless of freight demand. Lairsen has seen this trend reflected in how many of his clients are going for newer trailers.

“Most shippers won’t load trailers that are older than 10 years,” Lairsen said. “This forced replacement that’s hitting right now is really what’s driving the majority of it. I think if you look at the more sophisticated carriers and operators, they know that there are good deals to be had on2-, 3- to 5-year-old trailers that are every bit as good as a new trailer.”

Lairsen added that it has been the less sophisticated carriers that have driven demand for new trailers, especially the ones that haul mostly for freight brokers. He noted that it has been these brokers that have pushed their carriers not to let their trailers age that much.

“When you have 185,000 trailers that are all aging out at the same time, even though demand isn’t high, that still tightens capacity quite a bit,” Lairsen said. “Leasing is attractive right now on new equipment because most equipment lessors have locked in their price.”

Lairsen added that fleets know trailer prices already have gone up this year and are expected to increase further in the second half. He suspects this has helped drive some of the push among those looking for the more attractive lease offers before costs go up.

“The manufacturer production slots are filled up or nearly filled up,” Lairsen said. “You have to take it with a grain of salt, it’s not because there’s an increase in freight. It really is just all of these drivers that have left the market.”