May Trailer Orders Decline 1%
This story appears in the July 8 print edition of Transport Topics.
U.S. orders for new trailers dipped by 1% in May to 14,428 units, the fifth decline in seven months, according to ACT Research Co.
The final tally was nearly unchanged from a year earlier because a jump in cancellations to 7.9% ate into the stronger level of total orders. Gross orders were 15,660 for the month, but there also were more than 1,200 cancellations.
“Orders appear to be moving sideways now after working their way up the recovery curve for two years,” said Frank Maly, ACT’s director of commercial vehicles transportation. “What we’re seeing now on trailer orders is more in tune with ongoing freight demand rather than catching up on delayed replacement.”
Through May, trailer orders were down 9.3% to 90,741 units, from 100,091 during the corresponding time in 2012. During April, they grew 6.9%, year-over-year, to 21,499 units.
Cancellations were greatest in the liquid and bulk tank segment, Maly said, as well as dry vans, the largest group.
“The dry van [cancellation] rate did pop up over 10% for the month, but that appears to be concentrated in just a couple of major customers,” he said.
“We are not seeing much cancellation activity right now, which is positive,” said Chris Hammond, vice president of dealer and international sales for Great Dane Trailers, Savannah, Ga. “We’ve been pretty level on order intake the past couple of months, and our backlogs still extend to the latter part of the year.”
Hammond said his van segment has stayed relatively strong but that flatbeds “have not grown as fast as we’d like to see with the housing numbers.”
Great Dane was the nation’s largest trailer maker in 2012, according to data from R.L. Polk & Co.
Wabash National Corp., the No. 2 manufacturer, declined to comment because it will soon report earnings for the second quarter.
Calls to other trailer makers were not returned by press time.
The trailer industry tracks shipments, rather than sales, and shipments are still growing, Maly said. The backlog of unfilled orders has decreased from a year ago by 12%, he said, but it is still at four to five months of production.
Hendrickson USA, a major supplier of axles, brakes and suspensions for trailers, has noticed a pullback in business, said Rence Oliphant, a vice president for sales.
“The last couple of weeks have slowed down pretty good in all segments,” he said.
The slowdown could be just a normal seasonal pattern, he said, as the first half of the year has generally been “very robust” and backlogs remain “solid.”
There is usually a “seasonal swoon” in the summer, Oliphant said, with orders returning in late August and September.
Although concerned about the erosion in orders, Oliphant said he finds reason for optimism from the increase in new truck orders.
“Anytime they’re over 20,000 a month, we know that’s a good sign, and they’ve been doing that for eight months now,” Oliphant said.
While Class 8 truck sales and trailer sales generally move together, their orders have had different cycles lately.
North American truck orders contracted for 13 months through January, but from February through May, they grew strongly.
In contrast, U.S. trailer orders expanded in eight of 12 months last year but have shrunk in four of five months this year.
“Business is very good for us; we’re building more trailers than we ever have,” said Steve Hallas, a sales vice president for MAC Trailer Manufacturing.
While the second half of 2012 was a lull for the Alliance, Ohio, company, the first half of this year has come back strong.
“We’ve heard of a slowing down but haven’t seen any evidence of it,” Hallas said. MAC makes dump, flatbed, bulk and transfer trailers.
Hallas said his customers are buying replacement trailers and not adding to fleet size. He said business is good because so many trailers have been pushed to the end of their useful lives that fleets must buy now.
Many customers do not wish to wait for the perfectly spec’d trailer to be made and are buying from available stock on dealer lots, Hallas said. Seeing this has led him to be more optimistic.
“We’re doing well, although the economy’s not really strong now,” Hallas said, adding that if broader prosperity were to take hold, production and sales would boom.
ACT’s Maly said the small market for liquid bulk tanks has been very volatile, with cancellations running between 11% and 16% of orders, and orders surging month-over-month from April to May.
This appears to be cancellations and then reorders in a small part of the industry that has experienced sharp sales swings, Maly said.
