Historic Month for Trailers

Trailer manufacturers received a record 47,810 new orders in October, smashing the previous mark by more than 25%, ACT Research reported.

October’s total surged 93.1% over the same time a year earlier and 25.5% higher than the old record of 38,086 set in March 2006.

Analysts said the gains were being fueled by fleets of all sizes and included nearly all trailer types. The growth also pushed manufacturers’ backlogs to 144,043, which also is a record and double the level of a year earlier.

“October was a banner month,” ACT’s Frank Maly said. “Fleets are at the point where they’re making good money, and they’ve got the ability to make these types of investments. Capacity continues to be tight, and there’s still a lot of activity for old stock that needs to be replaced.”

Dry van orders almost doubled year-over-year to 31,603 while refrigerated trailers jumped 132% to 6,170. Flatbeds posted their second-highest total ever, topping 4,700 units, more than double a year ago, ACT reported.

“There’s even more strength coming from the small-to-medium fleets, as well as from dealers, who need inventory,” he said.

The orders came as “we’re just getting to the seasonally busy period,” Rhem Wood, senior analyst with BB&T Capital Markets in Richmond, Virginia, told Transport Topics. “It speaks to the demand that’s out there — the age of the fleets, and fleets are doing well.”

Manufacturers attributed the spike to fleets placing their orders earlier than usual to secure 2015 manufacturing slots.

In addition, Craig Bennett, senior vice president of sales and marketing at Utility Trailer Manufacturing Co., said customers recently have begun expanding their operations.

“Confidence is growing among truckers that the U.S. economy’s recent improvement is going to continue into next year, and they are ordering trailers for delivery next year,” he said.

Utility is building as many trailers as its production capacity allows, but backlogs are still pushing out, he said.

“Supplier shortages and allocations have started to become reality in some product areas and probably will continue,” Bennett said, adding that component and material costs are starting to move higher.

Chris Hammond, vice president of dealer and international sales at Great Dane Trailers, said the extraordinary level of demand was driven by large- and medium-size fleets, as well as dealers ordering stock for next year.

“There is expansion in many fleets, and there are a lot of aged fleets that are updating their equipment,” he said.

Manufacturers are trying to squeeze more capacity out of their current plants as their backlogs extend, Hammond added.

David Giesen, vice president of sales and marketing for Stoughton Trailers, said the October surge seems to indicate a “pull ahead” as fleets expedite their order commitments.

“I think these fleets are just getting ahead of the game,” he said. “They’re ordering earlier than normal and getting into the order board.”

Despite the increase in orders, Stoughton hasn’t experienced issues with parts shortages, Giesen said, in large part because the company’s expanded backlog gives it more time to order the components it needs.

Glenn Harney, chief sales officer at Hyundai Translead, also said the tightening production capacity for 2015 has put pressure on many buyers to place their orders early because “they don’t wish to be left out of the peak production months.”

Total orders this year are 278,320, up 56.6% from a year ago. And while the 2006 total of 286,540 was the highest in the past decade, several years in the ‘90s topped 300,000 orders, Maly said.

“We’ve had some pretty significant numbers in the last 20 years, but there’s no question this is going to be higher than we saw in 2006. We’re almost there now,” he said.

ACT lists the all-time record at 327,000 in 1994. Although the group does not forecast orders, it does forecast trailer shipments, which are up 12% through October.

“We’re just a touch over 224,000 on a shipment basis,” Maly said. “We’re tracking pretty well” toward ACT’s 272,000 shipment forecast for 2014.

“We would anticipate those types of gains will continue,” he said. “Given where the backlogs are, it will be interesting to see if there is some pressure to get more units off the line by the end of the year.”