Trailer Orders Rise 29.1% as Year-End Rush Begins Early

This story appears in the Dec. 3 print edition of Transport Topics.

Orders for new freight trailers jumped 29.1% in October from the same month in 2011, the highest monthly total since January, as the end-of-year rush appeared to arrive early, ACT Research reported. Sales totaled 23,597.

“We did hear that there were some large fleets that did come to market during this month,” said ACT analyst Frank Maly. “We normally see a kick in November and December. It looks like that got pulled forward a little bit, at least in the case of some customers.”

The year-over-year gain in October was enough to lift the tally for 2012 above the 2011 pace. Through 10 months, trailer makers have received 186,271 net orders in 2012, up 2% from the same timeframe last year, ACT reported.

October’s orders tally was also 38.9% higher than September’s.

The increase was led by a spike in dry van orders, which nearly doubled from the previous month. Net dry van orders totaled 15,978 in October, representing a 66.4% jump from a year ago, and a 95.2% leap from September, Maly said.

Chris Hammond, vice president of dealer sales at Great Dane Trailers, Savannah, Ga., said “a lot of deals” for new dry vans closed in October and into November, with additional customers still finalizing plans.

Seven years ago, the trailer industry saw its biggest year since the late 1990s, he said, “so there are a lot of 7-year-old vans out there.”

Craig Bennett, senior vice president of sales and marketing at Utility Trailer Manufacturing Co., City of Industry, Calif., said his company’s order backlog rose steadily in September and October, rising 27% during that timeframe.

“There is a slowdown in flatbed products, but reefer and dry vans continue strong with bookings into next year,” he said. “Most orders are replacement of older trailers, but there is some growth.”

Maly said manufacturers’ backlogs rose on average to 4.1 months by the end of October, compared with 3.7 months at the end of September.

Despite a high level of quote interest, many fleets had been “pretty much on the sidelines” in recent months while waiting for economic and political uncertainty to pass, ACT’s Maly said.

“I’m not saying all of that uncertainty is gone by any stretch of the imagination, but eventually, from what we see from an age-of-fleet standpoint, people do have to start replacing that equipment,” he said.

The average age of trailers at the end of October was about eight years, but ACT expects trailer age to decrease slightly in 2012, which would be the first decline since 2007, Maly said.

Dick Giromini, CEO of Wabash National Corp., Lafayette, Ind., said in a Nov. 1 conference call that he believes demand for trailers will remain strong in 2013, citing “the excessive age of fleet equipment, stable customer profitability, regulatory compliance requirements, along with increased residual value of used trailers and greater access to financing.”

Giromini said quote activity for 2013 “has picked up nicely, with several large deal orders, meaning orders greater than 500 units, already booked with our direct channel customer base and numerous others in active conversations for equipment needs for next year.”

“Old equipment is inefficient equipment,” ACT’s Maly said, because it can be expensive to operate and can lead to problems under the government’s Compliance, Safety, Accountability ratings program. “You need to make sure that your fleet is going to be of the quality to meet those requirements,” Maly said.

Glenn Harney, chief sales officer at Hyundai Translead, San Diego, agreed that CSA has added some urgency for carriers to retire older trailers.

Like Maly, he described a tug-of-war between fleets’ concerns about the business environment and their need to replace old equipment.

“I think the economic uncertainty and the unfavorable impact on trucking from many taxes and regulations would have a much bigger impact if it were not for the structural need to replace aging trailers,” Harney said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, Stoughton, Wis., said more customers seem to be moving forward with plans to replace older equipment.

Stoughton had a “normal” October, but November will be “much higher,” he said. For the industry as a whole, Giesen said he suspects that trailer buyers will place orders in November at a level similar to October.

Other trailer makers did not respond to requests for comment before Transport Topics’ deadline.

Maly said order cancellations were generally “pretty benign” in October, but the dry bulk trailer segment saw its seventh consecutive month of net negative orders, with 132 new orders compared with 237 cancellations. He attributed the segment’s high cancellation activity to a decline in energy sector investment. Even so, the industry still has about a 7-month backlog for dry bulk trailers at current production levels, he added.