Trailer Orders Soar 86.2%

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

New trailer orders spiked 86.2% in September from a year earlier, soaring to the highest level in nearly a decade as fleets rushed to reserve 2015 build slots, analysts and manufacturers said.

U.S. trailer makers pulled in 32,194 net orders, the highest monthly total since January 2005 and the sixth best on record dating to 1990, ACT Research reported.

It also was the largest September on record.

September’s total, which dwarfed the 17,294 orders placed in September 2013, also jumped 29.3% from August’s figure of 24,894.

“The pace of orders continues to amaze,” said ACT analyst Frank Maly, who attributed much of September’s surge to fleets making their order commitments earlier than usual.

At a time when manufacturers’ backlogs continue to expand, many buyers already have been getting in line to secure production slots for next year rather than waiting until November or December to make those moves, he said.

“They know the queue is already pretty full,” Maly said. “They don’t want to come too late to the party.”

Through nine months, customers have ordered 230,394 trailers this year, a 50.7% jump from 152,914 in the same timeframe last year.

With three months to go, the cumulative 2014 net order total has already nearly matched the 232,153 orders placed in all of 2013.

This year is on pace to be the best for net trailer orders since at least 2006, when orders crested at 283,164, and could surpass that figure if incoming orders remain strong.

Wabash National Corp. CEO Dick Giromini said the strength of order activity this year supports the company’s “long-standing belief . . . that this could turn out to be an extended cycle of strong demand for our industry.”

That demand is being driven by “excessively” aged fleets, a “demanding” regulatory environment, high truck utilization and an improved pricing environment for trucking companies, he said on the company’s Oct. 29 earnings call.

ACT said industry backlogs increased to about 121,000 units at the end of September compared with just 68,000 at the same time last year.

Backlogs also grew sequentially from about 114,500 in August, running counter to normal seasonal patterns.

Utility Trailer Manufacturing Co.’s backlog growth has been “dramatic and unsustainable for very long at this rate,” said Craig Bennett, the company’s senior vice president of sales and marketing.

New orders were primarily for the first half of 2015, with some exceptions further out, he said.

“Customers are starting to grow their fleets and are anticipating expansion because of strong freight demand,” Bennett said. “They are also getting increases in their freight rates and so are feeling good about the near-term future.”

Backlogs are also into 2015 at Great Dane Trailers.

“The mid-size and large fleets are aware of the upturn in business and they are planning for next year earlier than they may have during slower times,” said Chris Hammond, vice president of dealer and international sales.

Great Dane’s distribution group is also planning further ahead and ordering stock trailers into the middle of next year, he added. “There is a lot of optimism in the trailer business right now and we expect that to last at least through 2015.”

David Giesen, vice president of sales and marketing for Stoughton Trailers, said his company received new orders from customers with immediate needs as well as from those who were reserving production spots in the first quarter.

In both cases, customers were placing their orders earlier than their usual cycles, he said.

Glenn Harney, chief sales officer at Hyundai Translead, also said many fleets are ordering earlier this year for their 2015 requirements.

He said about 70% of his company’s incoming orders in September were for next year.

Similar to ACT, research firm FTR reported an “exceptionally strong” total of 32,111 net trailer orders in September, an 80% jump from a year ago and up 32% from August.

FTR also said the spike reflects the early booking of orders into 2015 as fleets recognize the increasing capacity constraints at the large trailer manufacturers.

“To firm up their requirements for all of 2015, those fleets have started placing large orders now,” said FTR Vice President Don Ake. “The orders are spread throughout 2015, so they should not put much additional stress on production rates.”

Wabash, the only publicly traded company among the major trailer manufacturers, reported last week that its third-quarter net income rose to $18.3 million, or 25 cents per share, from $16.2 million, or 23 cents, a year earlier.

Revenue climbed 12% to a quarterly record of $492 million as new trailer shipments for the quarter rose to 15,600, up from 12,600 a year ago.

Wabash said it now expects to ship between 54,500 and 56,000 trailers this year, up from its previous estimate of 53,000 to 55,000.

The company said it ended the third quarter with a backlog of $794 million, 41% higher than a year earlier.