Trailer Orders Rise 16.7% to Highest in 11 Months

This story appears in the Jan. 6 print edition of Transport Topics.

November trailer orders climbed 16.7% from a year earlier to 25,670 as the U.S. economy continued to improve, yielding the strongest monthly total in nearly a year, ACT Research reported.

The November tally marked the fourth straight month of year-over-year growth, after orders lagged behind 2012’s pace in five of the first seven months.

While December orders are not yet available, the recent strength in orders bodes well for 2014 trailer production too, said Ken Vieth, ACT’s founder and general manager.

“If the new year is going to be strong, you really need a good fourth quarter,” he said. “November was very good.”

An order is tallied when initially placed by a fleet, while production figures reflect when a trailer is actually manufactured, generally several months later.

November orders also were up 3% from October, when orders had surged 43% from the previous month. Through 11 months, manufacturers received 202,564 net orders, down 1.4% from 205,463

in the same timeframe in 2012. November’s total was the highest since 30,535 in December 2012.

Vieth said the hours-of-service rule change that went into effect July 1 has “definitely curtailed the productivity of the drivers.” As a result, more fleets may move increasingly to drop-and-hook freight movements, which could be leading to an increase in the average number of trailers per tractor.

ACT also reported that the industry’s total backlog at the end of November was 77,000 units, representing about three months of production.

“It’s not a big number, but it’s not bad,” Vieth said.

ACT projected that the U.S. trailer industry would end the year building 242,000 units after the December results are totaled, up from 237,000 in 2012.

“Every indication is that the economy is growing and trucking will benefit. That leads to trailer orders,” said Glenn Harney, chief sales officer at Hyundai Translead.

“We’re starting to see a few more pluses on the economic side,” Vieth said. “Maybe we actually have a little more strength heading into this new year than we know we have.”

Chris Hammond, vice president of dealer and international sales at Great Dane Trailers, said 2013 in general was “a good year for the trailer industry — especially with 2009 and 2010 in the taillights.”

“We believe 2014 will be very similar to this year [2013],” he said.

Utility Trailer Manufacturing Co. shared that outlook.

“Overall, 2013 has been a very good year historically, but an improved view of the economy could encourage fleet growth in addition to normal replacement cycles for 2014,” said Larry Roland, Utility’s marketing director.

Harney, at Hyundai Translead, said demand in 2013 was strong enough for manufacturers to fill production space but not so strong that they were challenged to manage the demand.

“There may be some specific types of trailers that did not see a big year, but vans and reefers were strong enough to qualify as a good year,” he said.

The company’s order backlog is about 15% higher than it was at the same point in 2012, he said.

“That really only gives us a 90-day window into 2014 that we can see will be strong,” Harney said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, said he expects the trailer business to be about the same in 2014, even with the end of bonus depreciation, which expired at the end of 2013.

“I don’t think it’s going to have as big of an impact as some may [think] because people still need to replace trailers,” he said. “The age-of-fleet problem is still in existence and really hasn’t gotten better. . . . I think people want to get into newer cycles, but time will tell.”

ACT also said few fleets are canceling the trailer orders they have on the books.

“Cancellations continued to be low [in November], and that appears to be the result of firm commitments by fleets,” ACT analyst Frank Maly said.