November Trailer Orders Jump 73% from ’08, but Remain Weak

This story appears in the Jan. 11 print edition of Transport Topics.

Orders for new commercial trailers jumped 73% in November from the depressed level of a year ago, even as they fell 27% when compared with the unexpectedly strong order surge in October, according to ACT Research Co.

Despite the recent improvement in orders, ACT, Columbus, Ind., said the trailer manufacturing sector remained far from normal, and most industry executives agreed.

The November growth in net orders was strongest in the two largest trailer categories, dry and refrigerated vans, with each posting triple-digit gains from November 2008, ACT said in its monthly report on the trailer industry in late December.

“While we were happy to see the above-trend orders in October, our sense was that, given the continued oversupply of equipment and relative lack of freight, the jump in orders was unsustainable,” Kenny Vieth, partner and senior analyst with ACT, said in the statement. “On a more positive note, factory shipments remained above production levels, reducing inventories to a four-year low.”

ACT reported that 7,219 commercial trailers were ordered in November, compared with 4,173 in November 2008, and 9,820 in October of ’09.

“Overall, if you look at the count of all units, the market is maybe slightly up in the last part of [last] year,” Chris Hammond, vice president of dealer sales for Great Dane Trailers Inc., told Transport Topics.

“The largest increase has been in refrigerated trailers,” Hammond added. “The trend in reefers has been building up for six months.”

He said that some of the strength in reefers is tied to the California Air Resources Board, whose stricter emission standards for diesel refrigeration engines took effect Jan. 1. The standards apply to any trailer entering California.

Truckers have the choice of retrofitting their trailers or purchasing new ones that come with CARB-compliant engines.

“Another reason has been the necessity to trade out because reefers don’t last as long as dry vans or flatbeds,” Hammond said. “Dry vans can last 10 to 15 years, while a lot of reefer companies cycle them out in five to seven years.”

“We’re forecasting more reefer sales this year, while drys and flats will stay pretty similar to [last] year’s flat rate,” Hammond said.

Craig Bennett, senior vice president of sales and marketing for Utility Trailer Manufacturing Co., City of Industry, Calif., said his company has seen growth in both dry vans and reefers, but not in flatbeds.

“We’re seeing a little pickup in business, with the added depreciation benefits and with CARB-related activity, in both reefers and dry vans,” Bennett told TT. “We haven’t seen growth in flatbeds, which are still in the doldrums.”

He said that Utility was “forecasting an increase in sales of 10% to 15% this year over 2009, especially with freight tonnage coming back a little, and that’s helping.”

Bennett also said that Utility already has hired back some laid-off workers.

“Our growth forecasts are nothing to rejoice about, though,” Bennett said. He explained that the forecasts were made against the worst year that the company has had in 35 years and that it still has far more laid-off people than the company was able to bring back.

“The other thing that’s helping is that tractors are getting heavier — 500 to 800 pounds heavier in 2010 — while the 80,000-pound weight limit remains static,” Bennett said. “That’s helped push sales of our composite dry vans, which are quite a bit lighter than any other composite dry van in the market.”

Glenn Harney, chief operating officer of Hyundai Translead, San Diego, also has seen some improvement.

“Our backlog is maybe slightly better than a year ago, and though the order activity is about the same, our quoting activity has improved, so we are mildly optimistic,” Harney told TT.

“Overall, we were down about 50% in sales in 2009, compared to 2008,” Harney said, “though reefers were down only about 10%.” He said he expected all of Hyundai’s products to improve in 2010, except for intermodal chassis.

“We were down about 80% in intermodal chassis last year, primarily because North American producers can no longer compete on price with Chinese manufacturers,” Harney said.

Stephen Latin-Kasper, director of market data and research for the National Truck Equipment Association, Farmington Hills, Mich., was more pessimistic.

“Our data shows trailer production did decline slightly from October to November and remains down from November,” Latin-Kasper told TT.

“Trailer production is likely to ramp up in the first half of 2010, not because the industry is improving but solely because it’s not as bad as the first half of 2009,” he said. “We don’t expect to see a substantial increase in sales until the second half of 2010, or even until the first half of 2011.”