Shortage of Available Build Slots Weighs Down April Trailer Orders

New trailer orders declined for a third straight month, dropping 31% in April compared with a year earlier, ACT Research reported, attributing the downturn to a shortage of manufacturing capacity rather than weaker demand.

U.S. trailer manufacturers booked about 18,000 net orders in April, down from 26,226 in the same month a year ago and also a 22% decline from 23,135 in March, ACT data show.

Frank Maly, an analyst with the firm, said the drop in order activity reflects the scarcity of remaining 2015 build slots for many key product lines after a “tremendous” surge in orders from September to January.

During that timeframe, fleets placed their order commitments earlier than usual in a race to ensure timely delivery of their new trailers, he said.

At this point, fleets looking to add new trailers may need to wait until next year.

Some trailer makers said they are already starting to take orders for the beginning of 2016.

“You actually have orders building up on the sidelines,” Maly said. “There’s no real place for them to go right now for a lot of trailer types. It’s an unusual set of circumstances.”

That situation could set the stage for another potential surge in orders later this year, he said.

At the end of April, industry backlogs still stood at about 171,000 units, representing about seven months of production, Maly said. The order backlog was down 5% from the previous month, but still 40% higher than a year earlier.

Research firm FTR reported that net trailer orders fell to 17,700 units in April, down 30% from a year ago and a 19% decline from March.

FTR said orders have cooled because many major fleets placed their orders in 2014 to cover 2015 requirements, but the firm also cited economic factors.

“Build rates are still robust, but most [manufacturers] did not match their great March numbers,” said FTR Vice President Don Ake. “This indicates fleets are not as anxious to take deliveries, which is consistent with a slowing economy and a moderating freight market.”

Fleets registered 56,809 new trailers in the United States in the first quarter, down 10% year-over-year, according to IHS Automotive.

Several trailer makers said they have had to decline orders this year because their build slots were already filled.

“Numerous customers have requested to place additional orders for 2015 dry van production that we have had to turn away due to timing needs or capacity restrictions,” said Dick Giromini, CEO of Wabash National Corp.

He said Wabash expects to see customers starting a dialogue about their equipment needs for next year earlier than usual to secure build slots.

“It’s still a little early in the process for most customers to be looking extensively at 2016 needs, but we should see customers become more serious about 2016 orders during these next few months,” Giromini said.

Great Dane Trailers could have sold more trailers this year if the company had more manufacturing capacity, said Chris Hammond, executive vice president of sales. “It’s always tough when you can’t build as many trailers as your customers are asking for, but that’s how 2015 turned out,” he said.

Great Dane already has started taking orders for the first part of 2016, Hammond added.

“Our dealers are planning their stock needs as well as our end-user customers who are discussing their needs earlier than they did last year,” he said.

Glenn Harney, chief sales officer at Hyundai Translead, said the company’s 2015 build slots have been completely booked for several months.

As a result, Hyundai Translead has been forced to decline some orders, but some of that business has been scheduled for the first quarter of 2016.

“In many cases, these have been placed over the past few months, but we have not reported them yet because we do not have an official schedule made yet for anything beyond January 2016,” Harney said.

Utility Trailer Manufacturing Co. continues to receive orders at a “brisk” rate, albeit not quite at the same level as last year, said Larry Roland, the company’s marketing director.

Nevertheless, Utility is currently “well ahead of last year” in terms of monthly output and expects to achieve a fourth consecutive record year for trailer production, he said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, said his company also had to pass up some business because the production slots were already taken.

“It’s not a good feeling, but we’ve had to do that this year,” he said.

Giesen said Stoughton is holding off on taking orders for 2016 because it hasn’t yet received pricing information from its component suppliers.