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August 16, 2018 4:45 PM, EDT

Trailer Orders Break Record in July Amid Fleet Demand

Trailer Orders Workers put the finishing touches on new trailers at Utility Trailer’s Clearfield, Utah, factory. (Utility Trailer Manufacturing Co.)

U.S. trailer orders broke past 29,000 to set a record for July, shattering the previous high of 28,058 for the month that had stood for 24 years, ACT Research Co. reported.

ACT cited a preliminary net estimate of 29,300 that it would revise when final data becomes available.

Dry vans and refrigerated trailers paced the overall performance, closing the month with backlogs that now stretch into March of next year, according to ACT.

“After a steady June [20,048 orders], fleets came roaring back into the market in July. Trailer makers had their strongest July net order volume in history, breaking a record that was set in 1994,” Frank Maly, ACT’s director of commercial vehicle transportation analysis and research, said in a statement.

“While strength was evident across all industry segments, it is noteworthy that cancellations remain low, indicating strong fleet confidence as we move through the rest of this year and into next,” Maly said.

Market research firm FTR pegged orders at 28,000, calling that a record volume for July, as well.

“This is a terrific order number for the month of July, usually the lowest order month of the year,” Don Ake, FTR vice president of commercial vehicles, said in a statement.

Don Ake

Ake

The boom occurred as trailer makers have opened up some of the 2019 order boards, so fleets have started ordering a couple of months early to reserve build spots and lock in prices, he said.

Strong economic and freight growth is expected to continue, Ake said, and already has trailer production at record levels.

“Orders should stay elevated as fleets continue to place orders earlier than normal for 2019,” he added.

Trailer orders now have totaled 350,000 units for the past 12 months, according to FTR.

One trailer maker said the need to have staged trailers at shipper locations was increasing — and could be a sign of carriers overbuying to fill that need.

“I have heard recently that carriers are experiencing very high shipper demand for staging free trailer pools at key factories and distribution centers. These pools are required to help the shipper pick an empty at the last minute that best serves the shipping lane for that load. If the carrier doesn’t have an empty sitting, they will lose the load,” Strick Group Chief Sales Officer Charles Willmott said.

At the same time, anecdotes are coming in, he said, of more and more shippers abusing this convenience in favor of using the pooled vans for prolonged temporary warehousing of product rather than for just-in-time efficiency.

“Even though most national carriers have trailer-tracking devices that can identify these warehousing situations, demurrage is not charged the shipper for fear that carrier competition will swoop in and take the business,” Willmott said.

He added that Strick is quoting for first-quarter production.

“Pricing for 2019 remains risky as many parts and component suppliers still do not know what their costs will be after Dec. 31,” he said.

Meanwhile, it remains an open question as to whether July was a pull-forward in orders, trailer executives said.

“Some of the orders coming in are fleets ordering in advance to secure trailers for next year, and if they would normally order in the fall, then yes, [July] is a pull-forward. However, not all fleets have placed their orders, so we can still have significant orders this fall,” said David Giesen, vice president of sales for Stoughton Trailers.

Hyundai Translead Chief Sales Officer Stuart James said he views “this extraordinary month” to be a pre-planning and order-execution strategy by transportation operators and equipment lessors to ensure they have production going into 2019.

He noted that with orders so far in advance of production, buyers’ plans are open to change.

“An order executed in good faith today may need to be canceled later in response to market shifts,” James said. “As a general statement, I think there is more certainty with orders placed nearer the actual build date.”

Hyundai Translead works closely with select customers to commit production space to them in the future on the basis of their plans, he added.

David Gilliland, vice president of national accounts for Great Dane Trailers, said, “I believe that the fall buying season, which has started already, will remain strong as there is demand from all customer segments.”

As for 2019, “We see similar demand to 2018, which is a positive sign,” he said.

Wabash National Corp. raised its full-year forecast for its own trailer production to 62,000 compared with 60,000 in its previous quarterly outlook.

“Customer sentiment is bullish, really, across the board,” Wabash CEO Brent Yeagy said in a recent second-quarter earnings call.