Trailer Orders Jump 165% as Fleets See Freight Growth

This story appears in the May 3 print edition of Transport Topics.

Trailer orders in March soared 165% over the comparable month of 2009, ACT Research Co. reported last week, as the strengthening economy and the brighter picture for the freight industry drove fleets to boost orders over dismal year-ago levels for the sixth month in a row.

Steve Tam, vice president of the commercial vehicle sector for ACT, told Transport Topics that March commercial net orders totaled 12,885 units. Because of the stronger order levels, the trailer manufacturing backlog now is at its highest point in the past 18 months, he said.

“We are finally getting to the point where guys are feeling comfortable placing orders,” Tam said.

“As fleets get more optimistic about the future, they will be more willing to part with scarce cash or use credit to buy new equipment,” he said.

“The trucking community is quite a bit more optimistic than it was three or six months ago,” Tam said, explaining that one of the reasons for the latest order pickup is the improving U.S. economy.

The other reason he cited for the rising order pace was the aging of the U.S. trailer fleet. The average age is expected to reach 8.15 years by the end of 2010, up from 7.82 years at the end of last year.

“There are signs that the fleet is a little long in the tooth,” Tam said. “Look at the back doors: They are not square or rectangular anymore; the side walls have been blown out; they’ve been hit too often by the forklifts and they’re losing their shape.”

“From a tactical perspective, [carriers’] . . . feet are getting a little close to the fire,” Tam said, as demand picks up and overall trailer fleet condition worsens, raising the difficulty of keeping good quality equipment in service.

It’s not uncommon to see trailers with damaged undercarriages “crabbing down highways” and struggling to follow straight behind the tractor, he said.

One sign of fleets’ optimism was the multiyear order by refrigerated carrier Prime Inc., which contracted with Wabash National Corp. last month for 4,000 new refrigerated trailers.

The 2010 delivery is set to be 725 trailers, Wabash said in a statement about the order that will be spread over 34 months.

Prime’s order accounted for nearly one-third of the total received by all makers in March, based on ACT’s survey.

“These thermally efficient and lightweight trailers are equipped with the latest technology to maximize product protection, while reducing our carbon footprint and conserving energy,” Robert Low, Prime’s chief executive officer, said in a statement.

Through the first three months of 2010, overall trailer orders have more than doubled to top 34,000.

Dry van orders, the largest segment, have more than tripled so far in 2010, and refrigerated trailer orders have jumped 63%, ACT said.

Refrigerated trailer orders held up better than others during the recession because demand and freight levels in that business were steadier.

Reefer orders are picking up now because older equipment has to be replaced, Tam said, as components such as cooling systems wear out.

Trailer makers have been struggling along with truck manufacturers, whose recent orders have risen from near-record lows after 2009, the worst sales year since 1983.

Trailer production hit its lowest level in 34 years during 2009, down to 80,000 units.

While Tam said the trailer manufacturers seem to be recovering from a two-year slump, he sounded a note of caution.

“The stretch of stronger months has come during the normal peak season for trailer orders, so the industry is being cautious about ramping up production too rapidly, to ensure growth is sustainable,” Tam added.

ACT has forecast 2010 production at more than 100,000 units.

At the same time that orders are getting stronger, anecdotal reports are being received that trailers are being scrapped, further reducing the size of the fleet.

Tam said it wasn’t known how much of the trailer fleet has been culled for scrap or diverted to noncommercial uses.

Consultant Stu MacKay of MacKay & Co., Lombard, Ill., said at the American Truck Dealers meeting in Kissimmee, Fla., on April 23 that he expects the total U.S. trailer fleet to drop by 133,000, or about 4%, to 3.30 million this year.

Commercial orders such as trailers that are 28, 48 or 53 feet long are included in ACT’s monthly statistics, Tam said. Also, the consulting firm based in Columbus, Ind., excludes vehicles such as horse trailers that are not typically for commercial service, he said.

Associate News Editor Jonathan Reiskin contributed to this report.