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August 13, 2019 5:15 PM, EDT

July Trailer Orders in Summer Slump

Trailers on a lot. Trailers on a lot. (Shutterstock)

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It’s been a tough year for trailer orders, and July was no exception as preliminary net orders fell below 10,000 units. It marked the seventh consecutive year-over-year decline, according to ACT Research.

Orders hit 9,900, ACT reported, citing preliminary data trailer makers would revise soon. That compared with 28,733 a year earlier, the best July on record.

“The order cycle set us up for a very tough comparison. At the same, we are building at a dramatically higher rate than orders are coming in. So we continue to burn the backlog,” said Frank Maly, director of commercial vehicle transportation analysis at ACT Research.

Research firm FTR pegged July’s preliminary net orders at 9,000.

ACT Research logo

Trailer makers remained optimistic that orders would rebound in the third quarter.

“Certainly, the [summer] slowdown is more intense than usual, so some part of it is signaling a broader impact from the market,” said Stuart James, chief sales officer at Hyundai Translead. “That said, we have several major requests for quotes in hand already for 2020, a fact that has surprised us as expectations were that another month might have to pass before we started to see this happening.”

Davis Giesen, vice president of sales at Stoughton Trailers, said the company has opened its order books for 2020, too. “[Customers] were happy to get pricing for their capital planning.”

At the same time, “The demand and volumes we had for trailers over the last few years are not sustainable,” Giesen said. “With lead times getting back to normal, fleets will have time make decisions on their 2020 trailer needs.”

At Utility Trailer Manufacturing Co., the private fleet and leasing business still is strong, but the for-hire segment is slow, said Craig Bennett, senior vice president of sales.

“We have cut out overtime and are letting attrition take place in our plants. We’re still working through a healthy backlog of orders even though cancellations have occurred,” he said. “I’m hoping that Presidents Donald Trump and Xi Jinping will make a trade deal soon. Uncertainty is not good for business.”

David Gilliland, vice president of national accounts at Great Dane Trailers, saw a return to normalcy, too, and expects August, September and October to be stronger. “We are coming off record high builds in vans and [refrigerated trailers] so nothing to panic about even if the order intake is less going into 2020.”

One company placing orders is Amazon.com, Maly said.

“I can tell you that I hear Amazon an awful lot. They are driving a fair amount of business right now,” including taking white stock trailers off the lots, Maly said, remarking on conversations with trailer makers.

That indicates to him that its logistics business is picking up.

“[Amazon is] probably trying to get some pretty aggressive positioning, not only with their own business for the theoretical holiday surge coming up, but the other freight transport they are starting to move on,” he said.

Amazon did not respond to a request for comment but recently announced new fulfillment centers in Ohio, Pennsylvania and Utah.

Another fleet said it would not be adding trailers this year.

Jarit Cornelius, vice president of asset maintenance at Sharp Transport

Cornelius

“But we had planned it that way,” said Jarit Cornelius, vice president of asset maintenance at Sharp Transport. “We did lots of catching up, getting the old out, the new in, over the past few years, and this year was set to be a no-order year.”

Sharp is a truckload carrier in Ethridge, Tenn., that operates 360 trailers — primarily dry van, combined with flatbed, end-dump and heavy-haul.

“Just like everyone else, the recession a few years back completely threw trade cycles out the window. Post-recession, we’ve been trying to play catch-up,” Cornelius said. “For trailers, we’re about 80% caught up. Some diversification in our company and the applications allowed us to slow trailer purges down somewhat and continue getting good utilization from older trailers.”

Tulsa, Okla.-based Melton Truck Lines Inc., a flatbed carrier, is scheduled to buy 385 trailers and trade in 200, Chief Financial Officer Robert Ragan said. Melton operates 2,415 trailers. The order has not been placed yet, he said Aug. 20.

“That typically occurs late September, first of October in a normal equipment cycle,” Ragan said. “The bigger picture is, we have not overreacted in good freight cycles or soft freight cycles. For 20-plus years, we have had fleet growth in the mid-to-upper single digits, growing organically.“

Melton’s ratio of trailers to tractors is 1.75 to 1, which, he said, is a little higher than for flatbed carriers typically because of its business in Mexico.

“We have quite a few trailers in Mexico and/or positioned at the border on any given day,” Ragan said.