U.S. Trailer Orders Increase 5.7%; October Total Is Year’s Highest

This story appears in the Dec. 2 print edition of Transport Topics.

Trailer orders climbed 5.7% in October to 24,910, the highest level so far in 2013, as fleets kept to their pattern of boosting acquisitions in the fall, ACT Research reported.

The increase was 43% on a month-to-month basis from September’s 17,459 total, underlining the trend, which was the biggest sequential increase since November 2011.

The previous high this year was in April, with a total of 21,512 units. October’s total was the most since December 2012 and topped the same month of last year, when the order pace was 23,541.

“It’s business as usual,” Steve Tam, vice president at ACT, told Transport Topics on Nov. 25. “The order cycle is very orderly. The trailer cycle is even more predictable than Class 8. The backlog of orders builds up during the late fall, winter and early spring, and then is worked off the rest of the year.”

Trailer orders have maintained an October-through-April cycle of strength, with a May-through-September “desert” for more than decade, Tam said.

In the latest 12-month cycle, orders averaged 22,000 per month from October through April and 15,000 per month for the June-through-September period.

Chris Hammond, vice president of dealer and international sales at Great Dane Trailer, said the Savannah, Ga.-based manufacturer is part of the growth pattern.

“We’ve seen increases in activity since October as fleets gear up for next year,” the Great Dane official said. “They are still replacing an aged fleet as our dealers continue to report a lot of trades on new trailer deals.”

“Most of the activity is for dedicated purchases into next year, so it’s replacement and some growth,” Hammond said. “I don’t hear anyone saying the economy is great by any means.”

“Business picks up at this time of year,” said Dave Giesen, vice president of sales and marketing at Stoughton Trailers, based in Stoughton, Wis. “We are hoping it picks up even further. There is still cautious optimism. We are still expecting some big fleet orders.

“The interest level is still high. People are saying they still need trailers,” he added “We have a number of customers saying they will wait to order until the first quarter. That is based on their cautiousness about what the economy is going to do.”

Larry Roland, marketing director for Utility Trailer Manufacturing Co. in City of Industry, Calif., told TT that fleets were continuing to show signs of caution in buying patterns. He attributed that to economic uncertainty stemming from the effects of the Affordable Care Act.

Business is picking up at San Diego trailer builder Hyundai Translead.

“We had a little bit of a slowdown, but now orders have picked up and our backlog is a little stronger,” said Glenn Harney, chief sales officer at Hyundai. “I think what we are seeing now is replacement demand.

“It all boils down to the fact that freight has to pick up more than it has, and then our customers will need more trailers,” he added. “The market only is going to change if there is an economic pickup or if there are regulatory changes.”

Tam agreed that demand for new trailers isn’t likely to accelerate beyond seasonal trends unless there is a measurable economic upturn.

One possibility that Tam mentioned is that long-rumored environmental standards could be published by federal regulators for trailers to match greenhouse-gas standards that were established for tractors more than two years ago.

Like the Class 8 truck market, Tam said the trailer market remains in equilibrium as orders keep pace with overall demand.

An issue that previously may have helped orders for trailers — the ability to take half of the depreciation for new equipment purchases this year — isn’t a factor right now because of lead times to build equipment, Hammond said.

“We’re past the accelerated depreciation build times,” he said, so those who want to claim the depreciation will have to buy out of dealers’ stock.

Dry van trailer buyers continue to drive the market and accounted for almost all of the increased order levels on a month-to-month basis, Tam said.

Most recently, trailer markets have been relatively flat for the past several years, though ACT is projecting a 5% increase in demand for new trailer equipment next year. The increase from 2012 to this year was less than 3%.

ACT earlier reported that there still were open production slots in the fourth quarter, suggesting slack demand.

While overall demand is seasonal, overall builds of new trailers have varied widely, falling as low as 80,000 in 2009 as fleets struggled with the recession. That was a 70% dropoff in manufacturing over just three years, ACT statistics show.