New Trailer Orders Surge 71% in April

This story appears in the June 6 print edition of Transport Topics.

Commercial trailer producers received 19,579 new orders in April, a 71% jump from the same month last year, and the manufacturers’ backlog rose above 100,000 for the first time in the current recovery, ACT Research Co. said.

At least two manufacturers complained that a tire shortage and other supplier problems were hindering efforts to meet the backlog.

Cumulative orders in 2011 through April 30 totaled 87,985 trailers, a 91% increase from 45,982 orders in the first four months of 2010, ACT said May 26 in its monthly report on the trailer industry.

“Orders have been a whole lot better than last year,” Chris Hammond, vice president of dealer sales, Great Dane Trailers, Savannah, Ga., told Transport Topics. “They haven’t been blazing hot.”

“Yes, order activity is very strong this year,” Charlie Mudd, president of Vanguard National Trailer Corp., Monon, Ind., told TT. Relative to last year, “April 2011 is much stronger, as ACT’s report explains.”

“We’re up about 320% in orders through April over what we did in that time period last year,” Hank Prochazka, vice president of sales and marketing at flatbed producer Fontaine Trailer Co., Haleyville, Ala., told TT.

Glenn Harney, chief sales officer of Hyundai Translead, San Diego, told TT that his company was seeing about the same percentage increase in order activity this year as the overall trailer producer industry.

“The cycle recovery is progressing nicely,” Dick Giromini, chief executive officer of Wabash National Corp, said May 25 at a conference in New York at investment firm Wolfe Trahan & Co.

“Utility is still hiring in all five factories and corporately in California and is increasing production output in all factories,” Craig Bennett, senior vice president of sales and marketing at Utility Trailer Manufacturing Co., City of Industry, Calif., told TT.

“Dry van orders are the hottest, followed by reefer and then flatbed and curtainside, which has finally come back nicely over the last couple of months, but from a life-support level,” Bennett added.

Hammond and Prochazka said, as did other manufacturing executives, that replacement of aging vehicles was the reason.

“Freight volume is up, but the main reason for the increase in orders has been the age of the equipment,” Hammond said. “There were so few builds during the recession, especially in 2009, that fleets have to get some really old stuff off the streets.”

“Replacement is what we’re seeing now,” “Prochazka said. “There’s not any new growth out there, but everyone in the industry expects it over the next three years.”

The backlog of trailer orders moved to 104,244 in April, the first time it reached six figures in this recovery, said ACT, Columbus, Ind.

“We are sold-out for the year until we open more capacity,” Vanguard’s Mudd said. “I believe many manufacturers may also be mostly sold-out for the year.”

“There are some material concerns, primarily tires, that prevent big expansion,” he added.

“We have a lot of plants and we have different capacities at each one, and a few of our dry van plants are booked up through the rest of the year,” said Great Dane’s Hammond.

“Depending on the type of refrigerated trailers that customers want, the lead time is 120 to 150 days out, though probably more toward 150 days,” he added.

The average wait time after ordering a new trailer in “April 2010 was at eight weeks,” Hyundai’s Harney said. “This April, we were at 15 weeks.”

“We have a big strong backlog into August, and we have added manufacturing lines,” Fontaine’s Prochazka said.

“Like everyone else, we are having trouble acquiring tires,” Prochazka added. “Besides cost increases across the board, delivery time from suppliers has been slow, and we’re working extra hard to find new suppliers, everything from suspensions to landing gear.”

He added that a tornado on April 27 hit Fontaine’s Haleyville plant.

“We lost a week and a half of production because of it,” he said. “We have three of our four lines back up and expect to be back in full production soon.”

April orders for new trailers fell about 30% from the 28,075 tally that manufacturers received in March, ACT said, but the drop-off was seasonal. Manufacturers said they were not concerned about the drop-off.

“New-order input has moderated in the second quarter somewhat from the frenetic pace of the first quarter, but not dramatically,” Utility’s Bennett said.

“Material cost increases across the board and higher freight costs have put trailer prices at new higher levels,” he said, “and there is some sticker shock occurring now, especially for customers who have not been in the market for a year or longer.”

“There will be a reduced number of [orders] coming out, but we expect to continue getting orders at a pace that will keep our backlog extended,” Harney said.

“Many of the companies that intend to order trailers have moved to get their equipment orders placed as they have seen the trend in the industry,” Mudd said, to explain the first-quarter surge.

“At the same time, many companies have seen the incredible increases in raw material and component costs and have moved to place their orders to avoid additional increases,” Mudd added. “Some manufacturers have slowed order acceptance or even stopped for now while raw material and component costs for late 2011 and into 2012 become clearer.”