Trailer Orders Rise 8.2%

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

Fleets ordered 21,769 trailers during April, the highest level so far in 2013 and 8.2% above year-ago levels, according to ACT Research.

April’s tally was 28.7% higher than March’s total of 16,911 and broke a string of three year-over-year downturns.

ACT Vice President Steve Tam said orders rebounded in April in part because fleets have moved beyond their uncertainty about how the federal budget cuts would affect the economy in general and their businesses in particular.

“I think we’re getting past that,” Tam said, adding that new trailer orders are “still all about replacement.”

Despite April’s gain, trailer orders for the year are down 10.4% from the corresponding period in 2012. Through four months, manufacturers have received 76,594 orders, compared with 85,519 a year ago.

Following the sluggish first quarter, ACT lowered its full-year forecast for trailer shipments to 248,000, which would represent about 5% growth over 2012, Tam said. At the beginning of the year, the firm had projected about 255,000 units.

“That’s a recognition of how things have played out,” Tam said. “The order flow hasn’t stacked up quite as well as we thought it would.”

The average trailer age in the overall fleet, which peaked at 8.3 years in 2011, will still be at 8.2 years at the end of 2013 if the forecast comes to fruition, ACT said.

“We’ve got quite a ways to go to bring that trailer age back down,” Tam noted.

Tom Rodak, director of corporate marketing for Wabash National Corp., said his company believes demand will remain strong.

“Key drivers such as excessive fleet age, customer profitability, regulatory-compliance requirements, along with increased residual value of used trailers, all support continued strong demand for new trailers,” he said.

Larry Roland, marketing director at Utility Trailer Manufacturing Co., said the year-over-year increase in new orders at his company was “much higher” than the 8.2% industrywide gain.

He attributed the increase to “slow but steady growth in the economy and the housing market,” but said the new orders reflect replacement needs more than growth.

In particular, he said, “new reefer business remains strong, and recent weeks have seen some improvement in dry vans.”

However, manufacturers said customers still are feeling some apprehension.

“There remains some uncertainty about the economy and regulations,” said Glenn Harney, chief sales officer for Hyundai Translead.

Likewise, Chris Hammond, vice president of marketing at Great Dane Trailers, said April orders “might have picked up a little,” but customers still aren’t rushing to buy new equipment.

“I think the sentiment is still pretty tepid out there,” but not “gloomy,” he said.

Nevertheless, Great Dane’s backlogs are “holding pat,” with production scheduled into the late third quarter and early fourth quarter, Hammond said.

“Last year was a pretty good year, and we feel [2013] is going to be a lot like last year,” he said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, said customers have remained cautious as economic indicators point in different directions.

He described April’s orders gain as a “normalizing” uptick following three lower months to start the year. “I think it’s just a little bit of catch up.”

Giesen said buyers are “holding off a little bit” before making a move.

Manufacturers added some cushion to their backlogs in April, according to ACT’s figures. Average backlogs at the end of April represented 4.7 months of production at the current rate of build, compared with 4.3 months at the end of March, Tam said.

Wabash’s Rodak declined comment on production levels,  but he said the company’s backlog increased to a “healthy” $674 million in the first quarter, representing about six months of production.

Hyundai’s Harney said his company is “comfortable with current production levels and fully expect[s] to maintain them for the balance of 2013.”

“Speaking for ourselves, we’re comfortable with where we’re at production-wise,” said Stoughton’s Giesen, who predicted that 2013 will end up being about the same as 2012. “If the year would have turned out like some people were telling us earlier, we would probably be trying to ramp up right now.”

Trailer orders will go into “a little seasonal slowdown” during the summer months, Giesen said, adding that customers are talking about placing orders during the third and fourth quarters.