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December 14, 2018 2:45 PM, EST

Trailer Orders Hit Record for November

Trailers Axles and wheels being attached to a Strick trailer at a plant in Monroe, Ind. (Roger Gilroy/Transport Topics)

Trailer orders surged to 45,002 in November, an all-time record for the month according to ACT Research Co., citing preliminary data.

One analyst said the extraordinary rise largely was due to one manufacturer.

Don Ake

Ake

“The numbers were strong as one trailer maker was catching up and filling in the rest of their order year, and it made the [overall] numbers really high,” said Don Ake, vice president of commercial vehicles at research firm FTR.

Ake declined to identify that OEM or its order volume.

“The orders, other than that, were pretty much according to expectations. They were still good, not great,” Ake said.

The past three months have been three of the top five volumes for total industry orders in history, said Frank Maly, ACT’s director of commercial vehicle transportation analysis.

“There are solid investment intentions across the boards right now,” he said. “We show the industry’s total order board closed November at nearly 239,000 trailers. That’s the highest level on record, breaking the previous mark set in December 1994,” he said.

More than 200,000 of that backlog are dry van and refrigerated sections, he said, but “even the vocational categories are solid as well — flatbeds, liquid tanks and, surprisingly, we are showing tight conditions on the bulk trailer side of the market.”

Trailer Orders

Maly

At current production rates, on average, industry backlog stretches well into the third quarter of next year, he said.

ACT is calling for production in 2018 to pass 326,000 trailers and in 2019 approach 316,000 units.

Trailer makers said manufacturing to meet the demand remained stressful.

“From the sellers’ standpoint, who could possibly complain?” Hyundai Translead Chief Sales Officer Stuart James said. “But a market this hot has unique stresses of its own as we maneuver to satisfy the production expectations of all of our customers.”

The supply chain remains constrained, he said, “but we learned valuable lessons in how to manage it this year.”

The pace of rising material costs seems to have eased, he added. However, James said, “We’re still concerned that they are settling at a higher level than we or our customers find tolerable.”

Stoughton Trailers is not quoting until it receives a level of commitment from its suppliers on price and availability, said David Giesen, the company’s vice president of sales.

“When we opened up Q2 quoting, the backlog filled in a very short time,” he said, “We are anticipating that when we open up Q3 pricing, then it will be the same frantic order intake to fill.”

While the supply chain remains strained, it’s not worse than it has been for several months, Giesen added. “This has been allowing alternatives to surface and meet the new demand needs.”

Also, the cost of materials remains high, said David Gilliland, vice president of national accounts at Great Dane.

“And add that to the increased labor costs and high demand — we aren’t seeing the pricing pressure easing,” he said.

Trailers

Workers assemble a trailer at a Hyundai Translead plant. (Hyundai Translead via Vimeo)

Strick Trailers has a backlog of one year with room in the third and fourth quarters for small, highly specialized orders, Chief Sales Officer Charles Willmott said.

“With average annual production about 225,000 in the 20 years prior to the ‘great recession of 2007-2009,’ the big question is, how long is this pace sustainable?” Willmott said.

Gilliland noted some slowing of orders was likely.

“I think that we will see a slowing of orders simply because demand has been unprecedented and the order boards for all OEMs are filling or filled. With that said, we do have flatbed and truck body capacity available in 2019,” he said.

Since its inception in the 1940s, the new trailer industry has been highly cyclical with an average cycle time of six years, Willmott said.

“We are in uncharted waters,” he added.

Backlogs are as long as Gilliland said he can remember, particularly in vans and reefers.

“Those van and reefer customers that have partnered with trailer makers have production slots,” he said, “but those who don’t may be having a difficult time obtaining slots.”

At Hyundai Translead, many buyers executed blanket orders to ensure they were included in its production planning.

“Now we are working with them to refine and define the specifications and timing in detail,” James said.

Meanwhile, cancellations have been mild, Maly said.

“In most every category, they are down below a percentage point. We measure cancellations as a percent of the backlog,” he said. “There is a band where cancellations are going to track, and pretty much every category is below that industry norm.”