Hyundai Translead CEO Sees Trailer Market Remaining Softer
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The new leader of Hyundai Translead said that while the U.S. trailer market was softer through the first half of this year compared with year-ago levels, he sees pockets of strength amid uncertainty heading into 2024.
“Generally, it has been replacements rather than any expansions” this year, said Sean Kenney, who took over as the company’s CEO on July 1 after serving as chief sales officer. He arrives at a time when the company’s 2023 order books are just about filled — on the day he spoke to Transport Topics, the final dry van build slots for the year were nearly gone — and Hyundai is working its way through an order backlog that resembles others around the sector. The company has closed out refrigerated trailers for 2023.
“It’s been a very good year,” Kenney said, adding, “Much of that is an aging out of customers’ equipment.”
But the signs headed into 2024 are murky; ACT Research data shows U.S. trailer orders more than halved in May compared with a year ago to an estimated 9,100 units.
A Hyundai Translead trailer. The refrigerated trailer market remains strong. (John Sommers II for Transport Topics)
Kenney acknowledged that the market remains tentative, with declining spot and contract rates tempering fleet behavior. Still, he notes that pent-up demand from fleets that could not get the equipment they wanted during and after the coronavirus pandemic remains.
The refrigerated trailer market has been and remains strong, Kenney said, noting that it is generally the most stable aspect of the company’s business. The last three months have shown improvement in the flatbed market, he said, especially compared with the first three months of the year. But even with this stabilization, flatbed is operating at a much lower level of demand.
Kenney noted that earlier strength in the chassis market is weakening as new capacity has been fielded, imports dropped and employment has stabilized.
Initial strength for this segment came on the heels of International Trade Commission anti-dumping actions in 2021, in addition to long supply chain delays and shortages of warehouse labor due to the pandemic, he said.
More broadly, Kenney noted that macroeconomic factors are also affecting the trailer business — specifically the tightening of credit markets. He said rising interest rates are having an impact on small fleets, as higher payments and steeper costs overall are swaying buyer behavior. This is especially true in the dry van market, he noted.
Kenney succeeds Bong Jae Lee in the corner office in Hyundai Translead’s San Diego headquarters. Lee, who spent seven years in the U.S. with Hyundai Translead, is to take a leadership role at a sister company within the Hyundai Motor chaebol — logistics specialist Hyundai Glovis. Before joining Hyundai Translead, he worked for American Trailer World and Wabash National.
Looking ahead, Kenney expects the overall trailer market to remain softer into 2024. This is more true with dry van than with refrigerated trailers, demand for which he expects to stay strong. He’s expecting the flatbed market to have an average year.
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In the chassis market, Kenney expects 2024 to be a year of transition with a right-sizing set to take place. He expects that segment to have substantial overcapacity next year.
The company’s order book for 2024 is technically open, he said, but customers and dealers are not ready to order yet.
“Customers are dealing with a lot of hesitancies and uncertainties,” he said. “Hyundai Translead anticipates a pullback across all markets, with the company seeing some strength in specific areas and offerings.” Kenney added, “How far things will pull back is anyone’s guess at the moment.”
