Trailer Orders Surge Cools, but Manufacturers Stay Busy

New orders for trailers continued at a strong pace in March, despite dropping 30% from a year ago, ACT Research Co., Columbus, Ind., reported, adding that total orders for the first quarter were down just 1% from the strong performance in the first three months of 2011.

Trailer manufacturers received 19,600 net orders in March, the third month in a row that orders have slipped from their late-2011 surge, ACT said April 25. Manufacturers said they already have enough work building replacement and new units to stay busy through the year.

To illustrate the order dip, fleets ordered more than 28,000 trailers each month in November and December 2011 (2-6, p. 3).

“You need to look at a longer time frame,” Frank Maly, ACT’s director of commercial vehicle transportation analysis and research, told Transport Topics. “I believe the trailer market is going back to more normal patterns, of good orders in the first part of the year, a summer slowdown, then stronger orders in the final three or four months.”

Representatives of three trailer manufacturers who talked to Transport Topics said they were planning for strong production through the fourth quarter, but at least one mentioned his company could slow plans down if orders continued to slip.

A stronger than usual backlog will help ease a continued downturn in orders, most of the representatives said.

“This year, we’re starting with a backlog that is 17% higher than a year ago, so we’re starting from a much higher point,” Maly said.

“When summer gets here, even if orders slow, all trailer spots would have been filled for the rest of this year, and we’d be talking only 2013,” Chris Hammond, vice president of dealer sales at Great Dane Trailers, Savannah, Ga., told TT. “We already have a few plants pushing in January right now.”

“Even if there aren’t many orders in the summer, we happen to have a solid backlog to build on,” said David Giesen, vice president of sales and marketing, Stoughton Trailers, Stoughton, Wis.

Craig Bennett, senior vice president sales and marketing at Utility Trailer Manufacturing. Co., City of Industry, Calif., also was optimistic, but concerned about slowing orders.

“Dry van and flatbed orders are still very strong, and we are still seeing increasing production in both categories,” Bennett told TT.

“Our new second assembly line is now operational in Glade Spring, Va., which will increase our capacity and segregate production of more complicated orders,” Bennett said. “Our backlog is near record highs but is not increasing at this time.”

Bennett said that Utility would hit a new production record if it continued with its present plans, but “there is definitely a more temperate pace of trailer orders overall from our perspective.”

“Our backlog speaks more to the fourth quarter, and that’s why we’re ramping up our efforts to build capacity, to get more hiring done and slotting more trailers for the fall rush,” Great Dane’s Hammond said.

“Reefer orders have been stronger because companies want their new equipment before the Fourth of July,” he said, “and then planning ahead for higher volumes for the Thanksgiving and Christmas rush.”

“If there’s been any slowing in orders,” Hammond said, “it’s only because we took in such huge orders in November and December from both fleets and our dealers.

“However, making replacements is still the prime reason for our strong orders,” he said. “Reefers especially don’t last as long, and when maintenance and repairs costs grow too large, the fleets have got to replace them.”

Hammond said, however, that he has seen some larger fleets beginning to increase the number of trailers they run.

“The business has been very strong for us, and that includes some big orders by major fleets,” Stoughton’s Giesen said.

“There may have been some slowdown in orders recently, but not alarming us at all,” he said. “There may be some wider slowdown, but nothing that concerns us.”

“Actually, we’re still actively hiring people,” Giesen said. “We’re still in a growth mode.”

ACT’s Maly has estimated that the entire industry would ramp up to producing more than 1,000 new trailers every working day in the fourth quarter, up from 900 at the end of March.

“We’re actually growing a little more than that percentage ACT discussed,” Giesen said. “All of the growth will be in our existing facilities.”

ACT’s Maly said that build figures were strong in March at 22,000 units shipped, up 18% compared with March last year.’

“That’s also a 16% increase from February’s builds,” Maly said. “No question, the build numbers are good news for OEMs.”

Vanguard National Trailer Corp. and Hyundai Translead did not respond to requests for comment. Wabash National Trailer Corp. said that, as a publicly traded company, it comments on orders only in its quarterly earnings reports.