Trailer Orders Fall 19% in June to 6,300 Units

In Q2, 26,000 trailers were ordered. (ELEVATE — Pexels.com)

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U.S. trailer orders continued trending below the year-ago figures in June, ACT Research reported.

Preliminary net data for the month showed orders decreased 19% year-over-year to 6,300 units. But the total also revealed a slight increase from what was reported the prior month. The seasonally adjusted total came in higher at 8,100 units.

“This year’s slower trailer orders are no surprise given the elevated order velocity of the past few years,” said Jennifer McNealy, director of commercial vehicle market research at ACT. “And with continuing weak for-hire truck market fundamentals, and already-filled dealer inventories, it looks like trailer demand is likely to remain constrained for some time. That said, it is important to remember that for orders, we are now in the weakest months of the annual cycle.”

The Environmental Protection Agency has proposed what it called the most ambitious pollution standards ever for cars and trucks. The Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles-Phase 3 proposes stringent standards to reduce GHG emissions from heavy-duty vehicles beginning with model year 2027. The California Air Resources Board and other state agencies also have proposed their own rules.

[July State of the Industry: U.S. Trailers Preliminary Update] - Preliminary Net Trailer Orders Indicate Slowdown Continues

Read more from the preliminary update here: https://t.co/50pUr9pUgW#Trailers, #Transportation, #truck, #trucking, #ACT, #ACTResearch pic.twitter.com/U87TwrAzRc — ACT Research (@actresearch) July 17, 2024

“While we do see fleets starting to make more money later this year, thereby increasing their ability to purchase equipment, the impact likely will be muted for the trailer industry as we continue to expect their willingness to spend will lean toward the purchase of new power units ahead of the EPA’s implementation of 2027 regulations,” McNealy said. “Industry anecdotes suggest that the ‘pause button’ is expected to remain pressed through the remainder of 2024.”

McNealy also noted that 26,000 trailers were ordered in the second quarter. This represents a 14% contraction compared with the same quarter in 2023. It also brings the year-to-date order tally to 74,500, a reduction of 24%.

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Lairsen 

“We saw an uptick in utilization in June, which was encouraging,” said Brandon Lairsen, vice president of trailer leasing at Transport Enterprise Leasing. “But it’s all replacement of older and more expensive equipment by most of our customers. Our go-to-market strategy for trailers is very disruptive for the industry so we’re seeing market share growth as a result of it. So, while all these companies are replacing those older, more expensive, trailers, they’re replacing them with ours, which is great. That’s all-new business for us.”

Lairsen notes that he still isn’t seeing an influx of equipment from his customers, signaling a possible trough in this cycle. He pointed out that prices have been leveling out. But there is little sign that trailer capacity is going to tighten until maybe early next year because of the excess capacity in the market.

“I think it’s still going to take some time for it to unwind,” Lairsen said. “There’s so much excess capacity just sitting idle in the marketplace from a trailer perspective right now. And with so many trailers built just post-COVID, it’s going to take a while for it to unwind and capacity to tighten to a point where companies are now looking at growth, instead of just bargain shopping for replacements.”

Lairsen observed that at this point in the cycle companies are recognizing that pricing has hit its trough and that now is the time to take advantage of deals to replace older equipment. He noted that it currently is a buyer’s market, but that also presents opportunities for the sellers that recognize that.

“Order volumes are down from last year, obviously,” said Dan Taylor, director of sales at Western Trailer Sales Co. “But it’s not terrible. We’re just out working harder; we’re out calling on our customers, we’re not sitting by the phone waiting for it to ring. The orders we’re seeing are a lot smaller, but we’re still moving equipment, generally selling what we have in stock before orders.”

Taylor pointed out that customers have been moving more quickly in the current market. They’ll identify a need and work to get it as soon as possible. Western Trailer has worked to ensure it has trailers in stock so the equipment is available when the need arises.

“We’re hearing a lot about this being election year,” Taylor said. “We’ve had people say they’re going to sit back and watch the election, and we as a company don’t necessarily agree with that, and we have long-term plans in place to replace machinery, do these different things along the way — and we’ve not stopped planning for the future.”