Trailer Shipments Dive 44%, End 2009 at 24-Year Low

This story appears in the Feb. 1 print edition of Transport Topics.

U.S. factory shipments of commercial trailers plunged 44% in 2009 from the previous year to 80,415 units, the lowest total since 1975, as dry van shipments fell to the lowest level since 1961, ACT Research Co. reported.

The drop was a combination of the recession’s effects on trucking and the trend to more efficient carrier use of trailers, industry officials said.

“Hitting a 34-year low needed not only the worst economic downturn in generations but also the impact of trailer-tracking technology on trailer productivity and utilization,” said Kenny Vieth, partner and senior analyst with ACT Research, Columbus, Ind.

“Last year was miserable, absolutely miserable,” Charles Mudd, president of Vanguard National Trailer Corp., Monon, Ind., told Transport Topics.

“The year was brutal and devastating for the trailer industry, and this came after down years in the past two before that,” Craig Bennett, senior vice president for sales and marketing, Utility Trailer Manufacturing Co., City of Industry, Calif., told TT. In 2008, 142,558 commercial trailers were shipped, ACT data showed.

“Many trailer and component manufacturers cannot survive at these output levels, considering their balance sheets, and the number of bankruptcies, business failures and mergers among component makers, manufacturers and truckers will increase this year,” Bennett said.

“We sold half the trailers in 2009 than we did in ’08,” Mike Dye, president of Southwest Trailers & Equipment LLC, Oklahoma City, told TT. “I’m normally an optimistic guy . . . but I’m realistic, and I don’t see anything on the horizon for any improvement.”

The only possible bright spot was commercial trailer factory shipments in December, which totaled 8,296, the highest month in 2009. Vieth said that the data showed some positive news, as inventories reached a new four-year low, “a prerequisite for improvement in production rates.”

In its Jan. 22 report, ACT Research said that trailer factory shipments posted the lowest yearly levels in 30 to 50 years in nearly every category, except for refrigerated vans. Vieth said the previous time the U.S. industry shipped fewer trailers was in 1975, when about 78,300 moved.

ACT said that 29,889 dry vans were shipped in 2009, down from 71,755 the previous year and the lowest total for dry vans since 1961, when 27,033 were shipped. The highest year for dry-van shipments since 1961 was 1999, when 192,954 units were shipped, ACT said.

“The flatbed industry had an even worse year” than dry vans, Vieth said. “The industry sent out about 7,700 flatbeds last year, the lowest level since 7,100 were shipped in 1954. The third worst year was in 1964, when 7,800 were shipped.”

Industry executives agreed that the recession was not the sole reason for the downturn.

“Trailer-tracking technology has absolutely had a tremendous effect on our industry,” Chris Hammond, vice president of dealer sales for Great Dane Trailers, Savannah, Ga., told TT.

Trailer-tracking systems use wireless and Global Positioning System satellite services that allow fleets to pinpoint the exact locations of trailers. Fleets previously depended on drivers or others to inform them of locations, which could be incorrect.

To compensate for not knowing where their equipment was, fleets kept an average of three trailers for every one tractor, sometimes as many as six-to-one, to ensure trailers were available when they were needed.

“Thousands and thousands of these products have gotten into the marketplace,” Hammond said. “Those who have used them correctly have been able to cut the ratio to 1.5. Most of the big guys know how to use them, and smaller fleets are starting to get into it.”

ACT’s Vieth said that the move to intermodal also was cutting permanent demand for trailers.

“One of the things dragging a bit on the trailer market is intermodal,” Vieth told TT. “Historically, domestic trailers that went on flatcars are being replaced by containers.

“The move away from trailers is good for about 5,000 trailers per year, and they are permanently lost,” Vieth said. “The containers are all being made in China.”

Despite the gloomy figures, many remained optimistic about their long-term prospects.

“We did a lot of things to advance us as a company, expand to build truck bodies, to build pups, and our business did pick up dramatically in the second half of the year,” Vanguard’s Mudd said.

He added that Vanguard had hired back all the laid-off workers it let go in 2009 who wanted to return and had to hire temporary workers.

“We lost a lot of sleep in 2009, but we’re going into 2010 in a much better position,” Mudd said. “We had three fleets that didn’t order any trailers for three years, and it became so expensive for maintenance and upkeep, they had to come in and put in major orders. We think there are a lot of other fleets like that out there.”

Utility’s Bennett said that he was expecting a 10% to 20% increase in 2010.

“That won’t be enough to recover all of what was lost last year and won’t come anywhere near the peak of 250,000 units of 2006,” Bennett said. “It’ll be slightly over 100,000 in 2010, well less than half the peak.”

Roger Simon, president of Pioneer Trailer Sales, Santa Ana, Calif., declined to comment on 2009 sales but was willing to discuss 2010.

“Hopefully, there will be some upswings,” Simon told TT. “I’m a bit optimistic, both because the economy may improve and demand will grow, and also the entire fleet’s trailer age is getting older.”