Trailer Orders Top 230,000 For Third Consecutive Year

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

New trailer orders in December totaled 29,164, the highest level of 2013, pushing the annual figure above 230,000 for the third consecutive year, ACT Research Co. reported.

Although the December figure was down 4.5% from the final month of 2012, it was up 13.6% from November’s total of 25,664, ACT said.

Orders have been “surprisingly stable over the last three years,” ACT analyst Frank Maly said. “That’s unusual because this is a pretty cyclical business. ‘Stable’ is not a term often used.”

Net orders totaled 231,728 in 2013, a 1.8% decline from the 235,998 ordered in 2012. In 2011, orders were 233,680,.

The past three years have been the trailer industry’s best since the recession, which bottomed out at about 85,000 in 2009. However, the current figure remains short of the most recent peak in 2006, when orders surpassed 286,000.

ACT anticipates that 2014 will bring more of the same, with total trailer shipments rising perhaps 1% to 2%, Maly said.

January figures were not available, but manufacturers generally reported high demand during the month.

“All in all, we’ve set a decent foundation for 2014,” Maly said.

He also said December’s order activity was driven by large carriers moving forward with plans to replace their older trailers, but commitments from small and medium-size fleets remained subdued.

Another factor that could have boosted orders was the expiration of bonus depreciation at the end of 2013, but Maly said “discussions seemed to indicate that not a whole lot of that happened.”

“Most of those who wanted to take advantage of it had already done so,” he said.

December’s order intake boosted industry backlogs to just over five months’ worth of production at current build rates, which is right in the “sweet spot” for manufacturers, Maly said.

“Overall backlogs are stretching out for van and refrigerated trailers, and production rates are similar to late last year,” said Craig Bennett, senior vice president of sales and marketing at Utility Trailer Manufacturing Co.

He also said Utility saw a fairly steady increase in orders during December and January.

Several large fleets moved forward with orders after delaying decisions in the third quarter, Bennett said.

Larry Roland, Utility’s marketing director, said the company closed out 2013 with a record production year of more than 38,000 trailers.

Chris Hammond IV, vice president of dealer and international sales at Great Dane Trailers, said January is “off to a good start,” with strong demand for dry vans and reefers, but the company expects 2014 to be another relatively flat year.

“The good news is that the industry is level at a relatively high production rate when compared to a few years ago,” he said.

Meanwhile, Hyundai Translead had a “strong” December following a “softer than usual” November, said Glenn Harney, the company’s chief sales officer.

“The trend we have seen to replace but not grow seems to be continuing,” he said.

David Giesen, vice president of sales and marketing at Stoughton Trailers, said many of his company’s large customers that often place their orders in December waited until early 2014 instead.

As a result, January and February “are both going to be very strong months,” he said.

Giesen said year-to-year stability in orders can help manufacturers better plan their production, but only if it aligns with expectations. That wasn’t the case in 2013 because early predictions for the past year called for additional growth that never materialized, he said.

Harney of Hyundai Translead said the order figures from recent years “seem to indicate a healthy market that reflects the discipline carriers are applying in the replacement-only purchases.”

Wabash National Corp. declined to comment due to the proximity of its quarterly report.

ACT’s Maly said dry van orders were virtually flat in 2013 from the previous year, reefers declined about 5% and platform trailers slipped about 3%. Liquid trailers dropped 30% from a year earlier, but dry bulk orders doubled, he said.

Cancellation rates have been “surprisingly low” during the past few months, indicating that the orders on the books are firm commitments, Maly added.