Trailer Registrations Fall 57.4%

This story appears in the Dec. 7 print edition of Transport Topics.

Registrations of new trailers in the United States are running at less than half of last year’s pace, nearly ensuring that 2009 will be the worst 12 months for trailer sales since at least 1975.

While a report on October trailer orders showed a substantial increase, executives of trailer manufacturers said that could be a one-month blip rather than an omen for sustained recovery. These officials said that 2010 sales should be better than this year, but they all shied away from predicting robust growth.

U.S. businesses registered 15,340 new full-size and pup trailers during the third quarter and 49,812 through Sept. 30, which is 57.4% fewer than the 117,039 in the first nine months of 2008, according to R.L. Polk & Co. In the same quarter of 2008, there were 34,601 registrations.

“Trailers are doing worse than trucks,” said Polk’s Gary Meteer Sr., account director for commercial vehicles.

As for orders, ACT Research Co. said Dec. 1 that net orders for new North American trailers hit 9,700, an 80% improvement over September and a 124% improvement over October 2008.

“October was a very good order month,” said Kenny Vieth, an ACT partner and senior analyst. “But is it replicable? We’ll have to see.” Vieth added that October was the year’s second best month for orders, behind 11,300 in April.

“I’m not positive where those orders came from. I think they might be just a few large national accounts, rather than from broadly across the market,” said Glenn Harney, chief operating officer of Hyundai Translead in San Diego.

Harney said the market is at such a low level now that just a few coincidental orders from large private fleets or truckload carriers could lead to a one-time eruption.

Vieth agreed, saying that so far he has seen just one good month for orders, not an argument for strong growth.

Earlier this year, analysts predicted 2009 trailer sales would total 70,000 units, making it the worst year since 1975 (click here for previous story). However, reaching that goal would take a fourth-quarter surge of 20,000 registrations, or the strongest performance of the year.

The nine-month performance this year would account for just one quarter’s worth of registrations as recently as 2007, according to Polk data. Vieth said ACT’s records go back only as far as 1990, but the company keeps old U.S. Census data that he said indicates the current trailer market is on a par with 1963.

“We’ve come off the bottom and demand has stopped falling,” said Craig Bennett, senior vice president of sales and marketing for Utility Trailer Manufacturing Co. The company had the market-share lead for dry and refrigerated vans registrations during the third quarter.

Bennett described 2008 sales as “horrible, but this year is even worse.” He said he anticipates a 5% to 10% improvement in 2010, adding that federal spending could play a strong role in the timing and strength of recovery in the trailer market.

“Will there be an infrastructure plan? There wasn’t much this year,” Bennett said.

At Great Dane Trailers, the refrigerated sector continues to show more strength than dry vans, said Chris Hammond, the company’s vice president of dealer sales. He attributed the refrigerated market’s relative health to the stability of the food-service industry and tightening regulations on reefer unit emissions by the California Air Resources Board.

“The worst of it [falling trailer sales] was earlier this year, but now reefer sales are leading the way out. Next year will still be very difficult,” Hammond said.

The market for used trailers is also “depressed,” he said.

“We track the housing and automobile industries, especially, and we need to see an appreciable change in direction from them,” Hammond said in explaining what he thinks would be a desirable sign for future trailer sales.

Wabash National Corp. did not provide a comment for this story, but it is the only publicly traded trailer manufacturer. In its Nov. 4 quarterly report, Wabash said that while its year-over-year sales volume declined, it has seen sequential improvement during this year.

Hyundai Translead’s Harney said he has been attending economic presentations at industry trade shows and said the consensus is that economic expansion will be very slow at least through June and maybe well into the third quarter of 2010. And while second-half growth might be better, even then, “it will probably not be a robust rebound,” he said.

The omen Harney is looking for, he said, is a widespread improvement in profits by publicly traded trucking companies. “The No. 1 thing to watch for,” he called it.

Until that happens, Harney said, his company has benefitted from keeping its debt low and diversifying into specialty containers. Utility’s Bennett said his company has focused on the production of lighter trailers so as to boost market share among companies wishing to increase payload size.