Trailer Makers Say Backlog Grows Despite Lower Orders in January

This story appears in the March 4 print edition of Transport Topics.

U.S. trailer manufacturers booked 20,357 new orders in January, which was down 20.1% from a year earlier but enough to boost manufacturers’ backlogs, ACT Research reported.

And despite falling 34.2% from December’s “unsustainable” level of 30,942, January’s total was still a “decent” number, said ACT analyst Frank Maly.

“The two months, on average, were pretty much where you would expect the industry to be right now,” he said.

Maly attributed the month-to-month swing to large carriers placing a glut of orders in December, which marked the industry’s largest monthly total since March 2006.

“The big fleets have been in and out of the market,” he said.

January’s order intake added to backlogs, which grew to 5.3 months based on current production levels, up from 5.1 months in December, Maly said.

Prime orders season started a month early in 2012 with a “really solid” October, but the total declined in November before surging in December and falling off again in January.

“When you look across the months, it’s been a saw-tooth pattern,” Maly said.

January’s order activity matched ACT’s expectations that 2013 might “stumble a little out of the blocks” before picking up steam later in the year, he said. The research firm still predicts a small gain year-over-year in 2013, he said.

“It’s more of a moderate pace of orders coming in now,” said Chris Hammond, vice president of marketing at Great Dane Trailers. “We kind of had a torrid pace during part of the fourth quarter.”

Great Dane’s backlogs are still reaching deep into the second quarter, he said, with some plants and lines now into the second half of the year.

Hammond said replacement demand is currently helping the trailer industry, which was hit hard during the recession.

“We must have really suffered a lot more during 2009 than the truck guys did, because there are a lot of guys having to replace older equipment,” he said. “There was just such an under-buy a few years back.”

In 2009, the trailer industry’s order intake dropped to 85,100, tumbling 70.3% from its banner year of 2006, according to ACT’s figures.

ACT’s Maly also pointed to replacement driving demand after buyers delayed investments in new equipment in recent years.

“Old units are inefficient units,” he said. “It affects scheduling. It affects maintenance costs.”

Like the industry as a whole, Utility Trailer Manufacturing Co. had January orders that were 41% below the same month last year and down 43% from December, Larry Roland, the company’s marketing director, said on Feb. 26. However, orders in January through late February were “virtually even” with the same timeframe in 2012.

“Freight tonnage is up, and with this, we would expect to see a growing market,” Roland said. American Trucking Associations recently reported truck tonnage at an all-time high in January.

But Roland said there are still factors that are holding back what might otherwise be an even better outlook.

“Rising fuel prices are once again making it difficult for truckers to absorb the additional increases, as well as consumer concern with new and proposed tax increases and the continued economic uncertainty,” he said.

At Utility, the dry van market is “holding steady,” he said, but the reefer business is stronger, a reversal from the past 12 to 18 months.

Dave Giesen, vice president of sales and marketing at Stoughton Trailers, said trailer buyers have been concerned this year about actions by the federal government regarding the effects of sequestration — a series of automatic budget cuts set to take effect March 1 unless Congress and President Obama came to a compromise — on the overall economy and trucking.

“We’re getting a little bit of that, but we’re still getting decent quoting and order activity,” he said. “People just need to replace equipment and maintain the numbers that they have.” Stoughton is projecting that its 2013 orders will be “a little bit up” from 2012, Giesen said. “We’re still expecting a good year.”

Other trailers makers did not respond to a request for comment by press time.