Trailer Registrations Fall 29.1% as U.S. Freight Volumes Slump
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Oct. 8 print edition of Transport Topics.
The sluggish U.S. economy has pulled down truck trailer sales this year and there are no signs of an imminent rebound, according to industry data on registrations and production.
U.S. businesses registered 101,041 trailers during the first half of this year, according to a new report by R.L. Polk & Co. of Southfield, Mich. That total represents a drop-off of 29.1% from the 142,604 units registered during the first six months of 2006.
“The decline in new commercial trailer registrations for the six-month period is almost identical to the 28.6% decline in [Class 8] new-vehicle registrations,” said the Polk report, which looked at registrations for all trailers from 24-foot “pups” and up.
In looking at how many trailers U.S. original equipment manufacturers are building, ACT Research Co. and Bear, Stearns & Co. found that OEMs produced 26.9% fewer units this August than they did in the same month a year ago.
The ACT-Bear Stearns report showed that while year-over-year build rates for trailers increased throughout 2006, they have been negative in each of the first eight months of this year — and increasingly so. July’s contraction in activity was 17.3%, while January was only down 5.4%.
While truck sales have been driven by changes in federal regulations on diesel engines, causing extreme boom-and-bust sales cycles in recent years (9-24, p. 1), sales by trailer OEMs have a more simple and direct link to the economy at large, said a trailer executive in an interview.
“People buy trailers when they need them to haul freight,” said Chris Hammond, vice president of dealer sales for Great Dane Trailers, Savannah, Ga.
“Sales are down throughout the industry. . . . Look at tonnage volumes (10-1, p. 5); there’s just not as much freight to haul around,” said Hammond, whose company is privately held.
Publicly traded Wabash National Corp. is now gathering information for its third-quarter earnings report, but in July, Chief Executive Officer Dick Giromini told investors his company was operating “in a challenging environment.”
“As truck transportation companies continue to face macroeconomic and industry-related headwinds, we anticipate total new trailer sales for the year to be approximately 48,000 units, of which approximately 90% are already booked.
“We are taking the necessary measures to optimize our business during this soft period. . . . We believe we are well into the trough of the cycle, and expect to see improving order rates in the second half of 2008,” Giromini said in a statement.
Great Dane and Wabash are the nation’s two largest trailer OEMs and the Polk report shows them trading market share position from last year to this year.
During the first half of 2007, Wabash customers registered 20,400 units, compared with 18,100 for Great Dane. However, during the first six months of 2006, Great Dane had the lead with 28,000 registrations, compared with 26,000 for Wabash.
Utility Trailer Manufacturing Co. maintained its third-place position with 13,700 registrations in the first half of this year, compared with 16,800 a year ago, Polk said.
Great Dane’s Hammond said the two prime indicators for which he is watching are turnarounds in automobile manufacturing and housing. Car makers reported a poor September (see story, p. 6).
Housing, he said, is important for trailer OEMs on several levels.
“You build a house with what goes on a flatbed, but look at what goes in the house in terms of appliances, carpeting and fixtures. That goes in dry vans,” Hammond said.
Year-over-year shipments of refrigerated trailers have declined the least, Hammond said, with dry vans declining more and flatbeds the most.
In March, Great Dane announced that 2006 was the company’s best year ever, during which it shipped more than 60,000 trailers. Hammond said this year should be more like 2004, when the company shipped more than 50,000 units. The problem, though, is one of perspective, he said.
“2006 was our best year and the two years running up to that were also good, but after that trend up it’s hard to go back. 2004 was a pretty darned good year, so the sky’s not falling, but we will have to be fighting and scrapping for every sale,” he said.
This story appears in the Oct. 8 print edition of Transport Topics.
The sluggish U.S. economy has pulled down truck trailer sales this year and there are no signs of an imminent rebound, according to industry data on registrations and production.
U.S. businesses registered 101,041 trailers during the first half of this year, according to a new report by R.L. Polk & Co. of Southfield, Mich. That total represents a drop-off of 29.1% from the 142,604 units registered during the first six months of 2006.
“The decline in new commercial trailer registrations for the six-month period is almost identical to the 28.6% decline in [Class 8] new-vehicle registrations,” said the Polk report, which looked at registrations for all trailers from 24-foot “pups” and up.
In looking at how many trailers U.S. original equipment manufacturers are building, ACT Research Co. and Bear, Stearns & Co. found that OEMs produced 26.9% fewer units this August than they did in the same month a year ago.
The ACT-Bear Stearns report showed that while year-over-year build rates for trailers increased throughout 2006, they have been negative in each of the first eight months of this year — and increasingly so. July’s contraction in activity was 17.3%, while January was only down 5.4%.
While truck sales have been driven by changes in federal regulations on diesel engines, causing extreme boom-and-bust sales cycles in recent years (9-24, p. 1), sales by trailer OEMs have a more simple and direct link to the economy at large, said a trailer executive in an interview.
“People buy trailers when they need them to haul freight,” said Chris Hammond, vice president of dealer sales for Great Dane Trailers, Savannah, Ga.
“Sales are down throughout the industry. . . . Look at tonnage volumes (10-1, p. 5); there’s just not as much freight to haul around,” said Hammond, whose company is privately held.
Publicly traded Wabash National Corp. is now gathering information for its third-quarter earnings report, but in July, Chief Executive Officer Dick Giromini told investors his company was operating “in a challenging environment.”
“As truck transportation companies continue to face macroeconomic and industry-related headwinds, we anticipate total new trailer sales for the year to be approximately 48,000 units, of which approximately 90% are already booked.
“We are taking the necessary measures to optimize our business during this soft period. . . . We believe we are well into the trough of the cycle, and expect to see improving order rates in the second half of 2008,” Giromini said in a statement.
Great Dane and Wabash are the nation’s two largest trailer OEMs and the Polk report shows them trading market share position from last year to this year.
During the first half of 2007, Wabash customers registered 20,400 units, compared with 18,100 for Great Dane. However, during the first six months of 2006, Great Dane had the lead with 28,000 registrations, compared with 26,000 for Wabash.
Utility Trailer Manufacturing Co. maintained its third-place position with 13,700 registrations in the first half of this year, compared with 16,800 a year ago, Polk said.
Great Dane’s Hammond said the two prime indicators for which he is watching are turnarounds in automobile manufacturing and housing. Car makers reported a poor September (see story, p. 6).
Housing, he said, is important for trailer OEMs on several levels.
“You build a house with what goes on a flatbed, but look at what goes in the house in terms of appliances, carpeting and fixtures. That goes in dry vans,” Hammond said.
Year-over-year shipments of refrigerated trailers have declined the least, Hammond said, with dry vans declining more and flatbeds the most.
In March, Great Dane announced that 2006 was the company’s best year ever, during which it shipped more than 60,000 trailers. Hammond said this year should be more like 2004, when the company shipped more than 50,000 units. The problem, though, is one of perspective, he said.
“2006 was our best year and the two years running up to that were also good, but after that trend up it’s hard to go back. 2004 was a pretty darned good year, so the sky’s not falling, but we will have to be fighting and scrapping for every sale,” he said.
