Trailer Orders Inch Up 1.8%; OEMs Foresee Pickup in Sales

This story appears in the Oct. 29 print edition of Transport Topics.

Trailer orders inched up 1.8% in September from a year ago to 16,990, ACT Research reported, and manufacturers said they expect order intake to continue growing in the final months of the year.

Sequentially, new orders rose 9.1% from August, the second straight month-to-month increase, following softness during the summer, the data show.

ACT Vice President Steve Tam said the latest industrywide figure represents “a step in the right direction, and I think maybe a little bit of foreshadowing of what we can expect as we move into the stronger order season of the year.”

Trailer makers typically experience an upturn in orders beginning in November, with higher-than-average numbers continuing through March, Tam said.

“Certainly, once we clear October, history would tell us we should start to see some meaningful growth,” he said.

Through the first three quarters of 2012, total net orders stand at 162,674, down 1% from the same timeframe last year, ACT reported.

Chris Hammond, vice president of dealer sales at Great Dane Trailers, Savannah, Ga., said order intake is “steady” and the company expects strong orders during the fourth quarter for delivery next year.

“A lot of large fleets are being quoted now and are indicating they are close to making buying decisions,” Hammond said.

Utility Trailer Manufacturing Co., City of Industry, Calif., saw its order intake rise by more than 20% in September from the previous month, said Craig Bennett, senior vice president of sales and marketing.

“We’re seeing an increase in activity through October that’s pretty significant,” said Bennett. He said order books are nearly full through the balance of the year.

“We’ve got a lot of customers that are trading equipment,” Bennett said. “They’re updating their fleets with more modern, lightweight equipment.”

Stoughton Trailers’ quote and order activity “remain solid,” said David Giesen, vice president of sales and marketing. “While some customers are taking a ‘wait and see’ approach, others are moving forward with replacement and growth plans.”

Several other trailer makers either declined comment or did not respond to requests for comment by press time.

ACT’s Tam said “the vast majority” of the demand for trailers is to replace existing equipment, much the same as it is for Class 8 tractors. The trailer market, however, experienced an even longer dry spell during the economic downturn than the heavy-duty truck market, he said.

“It’s so much easier to defer replacement of a trailer because the maintenance to keep it on the road and keep it running is relatively simple and inexpensive,” Tam said.

Tam said manufacturers’ backlogs dropped to 3.7 months in September, down from 4.2 months in the previous month. Backlogs were “a bit low” in September compared with the target range of four to six months, but that decline was in line with typical patterns for the time of year, he added.

Manufacturers received 8,184 net orders for new dry vans in September, down 7.6% from a year ago, but up 4.7% from August.

Utility’s Bennett said reefer orders slowed during the summer, in part because of uncertainty about the price and specifications of new refrigeration units.

“But now all of that’s pretty well solidified, so the orders are being placed,” he said.

Bennett said Utility is “probably going to build a record number of trailers” in 2012, and expressed optimism that next year’s business will be close to this year’s or slightly better.

The cancellation rate for total trailer orders rose to 9.5% in September, up from 6.2% in August, but down from a recent peak of 11.7% in June, Tam said.

September’s cancellation figure is not unusual, he said, but added that it’s “on the high end of normal.”

Liquid and dry bulk trailers saw a 70.9% combined cancellation rate during the month, the highest since May of 2009, ACT said. Customers placed 437 new orders for those trailers in September, but also canceled 310 existing orders.

Tam attributed this volatility to a “cooling” of the “fracking” boom as natural gas prices declined.