April Trailer Orders Up After Six Months of Declines
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U.S. trailer orders increased year-over-year for the first time in six months during April, ACT Research reported.
Preliminary net data for the month showed orders increased 37% to 13,700 units from 10,000 in the prior-year period. But there was little change sequentially from the preliminary total of 13,600 units ordered in March. The last year-over-year increase happened in September 2023. The seasonally adjusted total came in higher at 17,300 units.
“Against year-ago data, with pent-up demand beginning to wane and supply chain congestion, for the most part, cleared, order activity continues to meet expectations,” said Jennifer McNealy, director of commercial vehicle market research at ACT. “Despite the positive year-over-year comparison, net orders remain challenged by a backdrop of weak for-hire trucker profitability, albeit with some green shoots of improvement beginning to show.”
McNealy added that trailer manufacturers and suppliers have shared over the past several months that orders are coming at a more tepid pace than the past few years. She expects trailer orders will remain muted even when fleets start to make money again as they prioritize new power units that meet upcoming regulations from the U.S. Environmental Protection Agency.
Jennifer McNealy, director of commercial vehicle research (ACT Research)
“Additional anecdotal information we’ve heard this month from those on the front lines of the trailer industry is that the ‘pause button’ is expected to remain pressed during this year of transition,” McNealy said. “The industry’s largest segments remain under pressure.”
She added that cancellations are anticipated to continue their oscillation into and out of elevated territory as dealers and fleets recalibrate their inventory and immediate needs. McNealy also noted that external forces, such as the U.S. and Mexican presidential elections and interest rates, are continuing to be closely watched.
Lairsen
“We’re seeing an uptick in requests for equipment,” said Brandon Lairsen, vice president of trailer leasing at Transport Enterprise Leasing. “And companies are actually starting to pull the trigger on taking more equipment from us than anything that we’ve seen in the last 12 months, for sure.
“Now, there’s still a lot of excess trailer capacity in the marketplace. And so most all of this activity is replacement trailers that companies are taking to refresh their fleets.”
Lairsen also has seen a lot of bargain shopping, with customers looking for better deals on the lease side. He noted that some companies got locked into expensive leases during the coronavirus pandemic when freight demand was high and equipment was in short supply. But now, with the current market conditions, he has seen efforts to get out of those deals.
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“I think a lot of companies are looking to get out of those higher-priced lease trailers and get into something a little more affordable,” Lairsen said. “But again, over 90% of this is just replacement. There’s no new growth really that they’re taking equipment for.”
He suspects a lot of these companies were waiting on the sidelines before the current round of replacements and believes they wanted to see whether they would even need the equipment. But now they have a good sense of this cycle, even with the weaker conditions.
“Hyundai’s April orders were slightly above their anticipated levels,” Hyundai Translead CEO Sean Kenney said. “Carriers continue to fight headwinds of rate and freight as improved profitability remains out of reach. Dealers are weighing having product on the ground for customers in light of a tentative market and high inventory carrying costs.
“Hyundai anticipates that the market will continue to have similar sentiments for the remainder of 2024 with a slightly improved 2025.”
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