March Trailer Orders Down 55.7% Year-Over-Year

Refrigerated trailer by Stoughton Trailers via YouTube

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U.S. trailer orders fell by over half of the year-ago total to just shy of 17,000 units in March, ACT Research reported.

Preliminary data shows orders decreased 55.7% year-over-year to 16,800 units from 37,900, according to ACT. They also fell 34.9% sequentially, with the prior month hitting 25,800 units. Trailer orders have seen a year-over-year decrease since closing out last year at the second-highest level on record.

“Preliminary net orders were 33% lower compared to February’s intake, and down 56% versus the same month last year,” said Jennifer McNealy, director of commercial vehicle market research at ACT. “Orders pulling back in March is a month earlier than normal seasonality would suggest, but near record-level order backlogs are easy to point to in explaining away the earlier-than-expected deceleration.”

McNealy added demand remains healthy despite the drop in orders, and build data has improved. She pointed out the backlog-to-build ratio was significantly higher than the historical average at 8.5 months in February. March backlog-to-build ratio will be available when data is finalized.

Despite a Drop in Preliminary Net Trailer Orders, Demand Remains Healthyhttps://t.co/TU56y8qoEo#Trailers, #Transportation, #truck, #trucking, #ACT, #ACTResearch pic.twitter.com/SA5hNuk2Gg — ACT Research (@actresearch) April 21, 2023

“The trailer backlog should decrease by around 12,000 units to about 230,000 units when complete March data are released,” McNealy said. “That said, with orders being preliminary and the build number a projection, there will be some variability in reported backlogs when final data are collected.”

Stoughton Trailers is a semitrailer manufacturer and dealer based in Stoughton, Wis. The company had been experiencing exceptionally high demand over the last two years like many others across the industry. But more recently it has seen a shift back to a more normalized market.

“In the last two years it was gangbusters,” said David Giesen, vice president of sales at Stoughton Trailers. “Anything you could build, you could sell. We were probably missing demand by a half or a third of what the whole market wanted for trailers. We just could not keep up post-pandemic. And now it’s shifting to kind of more of a normal market.”

Giesen has seen some customers who were unable to get all the orders they were requesting previously pull back on how much they want. But he still sees demand as being healthy despite not being at the levels it was the last two years. He noted the build slots are still being filled with a backlog that stretches well out into 2023.

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Giesen 

“That pent-up demand is still there,” Giesen said. “But what we’re seeing now in the marketplace is freight rates are softening. And when freight rates soften, a lot of people get nervous and don’t want to order as many trailers as they’ve talked about. That pent-up demand is still there so there’s still people taking lots of trailers.”

Giesen pointed out the changes in demand are also customer-specific and depend on what space they’re operating in. He noted some customers still want as many trailers as they can get while some don’t want any.

“You hear about the supply chain being fixed,” Giesen said. “It is not. We still have weekly and monthly forecasting issues of getting all the components and supplies that we need. That is still a problem so it still affects us very much in what we can do and when we can do it. Normally we have a shorter lead time to order things; now that lead time is still way out to order stuff to make sure you’re going to get it. So, our situation hasn’t improved dramatically from a supply chain situation.”

Utility Trailer Manufacturing Co. is a dry van, flatbed and refrigerated van manufacturing company based in City of Industry, Calif. The company has seen orders soften for both flatbeds and dry vans. But demand for refrigerated trailers has remained solid.

“Raw material costs, such as steel and aluminum, dropped at the end of Q4 2022; but have risen steadily in the past four months,” said Brett Olsen of corporate communications at Utility Trailer. “The U.S. Midwest Domestic Hot-Rolled Coil Steel published April 12 rose to $1,203 per ton, up $186 from the March number. Aluminum has taken a similar course. Laminated trailer flooring is still at record highs, with no signs of receding.”

Utility Trailer is also still grappling with a shortage of parts. Olsen pointed to transport refrigeration units, air disc brake calipers, trailer telematic components and other electronics as being the most notable for these shortages.

“We continue to see orders but are running into the normal spring slowdown,” said Chris Hammond, executive vice president of sales at Great Dane. “Some segments continue to outperform while others are showing softness, especially any segment reliant on spot market freight rates. We believe 2023 will be a better-than-average year for our industry but also recognize the frenetic pace has cooled off.”