Trailer Orders Soar 43.9%; Strongest June in 15 Years

This story appears in the July 28 print edition of Transport Topics.

New trailer orders posted the strongest June in 15 years, ACT Research reported, showing further evidence the sector is poised for its strongest year in nearly a decade.

U.S. trailer manufacturers booked 21,997 net orders during June, up 43.9% from the 15,286 orders placed the same month in 2013.

“The summer months are often trucking equipment OEMs’ least favorite time of the year as slowing orders and increased production rates create tension associated with declining cushion in backlogs,” analyst Michael Baudendistel of Stifel, Nicolaus & Co. said in a July 22 note. “However, orders this summer have held up well so far, which we attribute largely to carriers chasing fuel-economy enhancements associated with new equipment.”

Although, on a sequential basis, net orders slipped 1.4% from May’s total of 22,310, that was the highest level for May since 1998.

Through the first half of 2014, trailer orders have soared 45% to 155,664 from 107,336 last year. That was the best first-half total ince 2006, when the industry accumulated 161,458 orders in the first six months on the way to a full-year total of 286,540.

In comparison, during the low point of 2009, first-half orders were only 42,364.

ACT analyst Frank Maly said tight capacity and the need for replacement equipment continue to drive demand for new trailers.

In addition, “It certainly seems that fleets are starting to add,” he said.

High demand for dry vans drove the order growth earlier this year, he said, but now that demand has expanded to other trailer segments, including platform trailers and liquid and dry bulk tanks.

Another factor that’s pushing buyers to make those moves sooner rather than later is the dwindling amount of manufacturing capacity remaining for the second half of the year, given the industry’s extended backlog, Maly said.

“If I want product that’s going to get delivered in calendar year 2014, I better get in line,” he said. “If not, I’m looking at a 2015 delivery date.”

Industry backlogs stood at 118,514 units at the end of June, down 2.6% from the previous month but 44% higher than a year earlier, Maly said.

And although the order total for June was the lowest so far in 2014, only three months last year had higher totals.

“June intake is outpacing the normal summer rates as customers continue to place orders which are being booked into next year,” said Chris Hammond, vice president of dealer and international sales at Great Dane Trailers.

“People buy trailers when they have confidence in their business,” he added. “There seems to be confidence in the transportation sector.”

Great Dane’s backlogs are now into 2015 at almost all plants, Hammond said.

Utility Trailer Manufacturing Co. continued to receive orders at a “good” rate despite a small reduction in backlogs last month, said Craig Bennett, the company’s senior vice president of sales and marketing.

Bennett said orders remain strong, in part because the industry is still recovering from a “dismal” 2009, when many fleets deferred their new equipment purchases.

David Giesen, vice president of sales and marketing at Stoughton Trailers, said that trucking companies, for the most part, are profitable this year.

Because they have the money, they’re moving forward with plans to replenish their fleets and “making the call that they’ve pushed off for years.”

Giesen said trailer demand continued to buck seasonal trends in June. “It was a very strong month, and it’s not normal to have that in June.”

Stoughton continues to expand its manufacturing capacity to meet its customers’ needs, he said. “We’ve got the healthiest backlog, I think, we’ve ever had, in terms of size and length.”

Hyundai Translead’s backlog continues to be very full, said Brett Bartels, deputy general manager of sales and marketing strategy.

“With the improvement in the economy, customers are now able to make more replacement equipment purchases,” he said.

Bartels said Hyundai Translead continues to see record production levels at its facility and does not foresee changes in the near future.

Wabash National Corp. declined to comment because its second-quarter earnings report is scheduled for release July 29.

Although orders continue to outpace year-ago levels, the industry also has seen higher numbers of completed trailers sitting at original equipment manufacturers’ facilities this year, ACT said.

OEM inventories increased 6% in June from the previous month, but Maly said that may be the result of customers being so busy that they weren’t able to pick up their new trailers right away. Earlier in the year, harsh winter weather may have delayed pickups and deliveries of new trailers, he added.