New Trailer Registrations Surge, Led by Dry-Van Replacements

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

Booming dry-van sales led to a surge in U.S. trailer registrations in the third quarter, as buyers registered 35% more new trailers than in the corresponding period of last year, R.L. Polk & Co. reported.

“The growth is amazing,” said Gary Meteer Sr., Polk’s account director for commercial vehicle and aftermarket groups. “The industry was almost out of business a year ago.”

Demand for trailers, which manufacturers said was driven mainly by replacement needs, also looks to remain strong in the months ahead, according to a Nov. 23 report from ACT Research. ACT reported that trailer buyers put 17,126 orders on the books in October — 79% more than in October 2009.

Some manufacturers said their orders backlogs were growing and they were adding shifts to keep up with growing demand.

Buyers registered 24,064 trailers in the third quarter. Of that, 16,478 were dry vans, according to a Nov. 19 report from Polk, which is based in Southfield, Mich.

Carriers registered 17,805 trailers, 11,081 of them dry vans, in the 2009 third quarter. Polk said.

Polk collects its registration data from the 50 U.S. states’ motor vehicle administrations. The firm counts trailers that are 24 feet or more in length.

In the first nine months of the year, buyers registered 76,125 trailers — 42.2% more than in the same 2009 period, according to Polk. Dry vans accounted for 54,650 of these and posted the biggest year-to-year increase by far —75.2%.

Wabash National Corp., Lafayette, Ind., was the market leader for the nine months ended Sept. 30. The company’s trailers accounted for 32% of new dry-van registrations, according to Polk.

So far this year “it truly is Wabash that is driving it,” Meteer said of the dry-van market. “Wabash registrations for the nine months are up 31%, year-over-year.”

Other manufacturers, with smaller market shares, also made big gains, Meteer said. “Hyundai Translead is up 99%; Utility went from 2,000 trailers to 10,000 for the nine months, with most of the growth in dry vans rather than reefers; Great Dane is up 35%, year-over-year.”

Wabash, the only publicly listed trailer maker, did not respond to a request for comment from Transport Topics. Great Dane likewise did not respond to a request for comment.

Executives of two other trailer makers told Transport Topics that manufacturing activity in their businesses was being driven largely by replacement activity among trailer buyers.

“We have a pretty strong feeling that most of our business is replacement business,” said Glenn Harney, chief operating officer of Hyundai Translead, San Diego. “We haven’t got an indication that any of it is for growth at this point.”

Likewise, Craig Bennett, senior vice president of sales and marketing for Utility Trailer Manufacturing Corp., City of Industry, Calif., told TT that “for the most part this is replacement demand.”

Bennett and Harney warned that trailer prices seemed poised to creep upward as materials become more expensive.

“Truck prices are going up, trailer prices are going up, also,” said Bennett.

In particular, the two executives said that a smaller supply of tires, coupled with rising tire prices, would drive up the cost of trailers.

“We’re still a little concerned about tires,” Harney said when asked whether his company’s suppliers had brought idled manufacturing capacity back online quickly enough to cope with post-recession demand.

“We’ve been goading them all for months now to gear up to support our higher levels,” said Utility’s Bennett. “And they’re making headway,” he added.

Bennett and Harney both said the demand seen today in trailer markets appears to be stable and sustainable. The latest monthly order numbers from ACT Research appeared to bolster the executives’ contentions.

According to the latest ACT data, net U.S. trailer orders in October reached a 33-month high, pushing U.S. manufacturers’ backlogs up by more than 5,000 units.

Compared with October 2009, “the backlog has almost exactly doubled,” Kenny Vieth, president of ACT, told TT Nov. 30.

Vieth said that dry-van orders appeared to be above the firm’s projected replacement levels for only the second month since 2007.

“If we look at our dry-van model, it says that we should be replacing around 120,000 units a year, or about 10,000 units a month.”

Other manufacturers affirmed that their order boards were swamped.

“We have four production lines and two are high-speed lines for dry-freight vans and we’re taking both of those to a second shift next week,” Hyundai’s Harney said on Dec. 1. “We’ve got enough backlog to fill them through April; we haven’t seen that in close to four years.”

“Our backlog is up significantly and our order output is up significantly,” said Bennett at Utility. Regarding total output for 2010, “we’ll probably be 30% to 40% above last year, when we’re all said and done, and we’re growing from there.”

“The industry has been working down excess capacity brought about by the downturn in the economy and excess capacity brought about by the productivity increase from trailer tracking,” ACT’s Vieth said. “It’s been a long work-off.”

Associate News Editor Jonathan Reiskin contributed to this report.