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August trailer orders post best month since October 2019

Trailer makers expect rebound to last into 2021 and rebuild backlogs

The continuing rebound for new trailer orders in August aligns with a three-year high in spot freight rates as consumers buy more goods than services during the coronavirus pandemic. (Photo: Hyundai Translead)

The continuing rebound for new trailer orders in August aligns with a three-year high in spot freight rates. The coronavirus pandemic leads consumers to buy more goods than services.

FTR Transportation Intelligence reported preliminary U.S. net trailer orders jumped 49% over July posting the strongest activity since October 2019. August orders were 174% above a weak August a year ago.

Trailer orders for the last twelve months now total 191,000 units, FTR said. While encouraging, it pales in comparison to the 2019 build of 332,600 reported by ACT Research. ACT pegged August orders at 27,500 after cancelations.

Dry van orders were particularly robust, FTR reported. Consumers spent 34% less in the second quarter. Goods orders dropped 11%. But services plummeted 46%, according to ACT.

A welcome and needed surprise

“Stoughton Trailers had a very strong month in August for new demand on trailers,” Dave Giesen, Stoughton sales vice president told FreightWaves. “This helped us push out our backlog as it also did for the industry. If we look at the last few months, it appears the industry has come back to life. Demand continues strong into September.”

Don Ake, FTR vice president of commercial vehicles, said August’s order total was a welcome and needed surprise.  

“The volume was much higher than expected and an indication that the industry is making a surprisingly quick recovery from the pandemic,” Ake said. “The strong August orders provide the industry with positive momentum for when fleets soon begin ordering for 2021.”

Industry leader Hyundai Translead said August orders were in line with July’s improvements. 

Dealer inventories falling

“Dealer inventories have come down at a nice rate enabling the overall channel to rightsize the inventory in it for the market we see,” Hyundai Translead Chief Sales Officer Sean Kenney told FreightWaves. “Generally speaking, there is a sense of cautious optimism among customers and dealers as we begin to approach 2021.”

Pent-up demand for van trailers coming out of the economic shutdowns is easing as fleets gain confidence in the strength of the freight markets. Dealers are placing restocking orders because demand was much greater in July and August after pausing earlier in the year.

“This fall, I expect the impact of the currently high truckload spot rates as well as pent-up demand for equipment to contribute to a robust order season,” FreightWaves equipment market expert Mike Baudendistel said.

A measure of capacity tightness, tender rejection rates for dry vans have been at elevated levels since early summer, suggesting that spot rates have been ahead of contract rates since that time. (FreightWaves/SONAR/VOTRI.USA)

That could also lead to longer production lead times, which fleets experienced during the trailer ordering boom from 2018 into early 2019.

ACT: Solid order board into mid-2021

“At current production rates, the industry order board extends into the middle of Q1’21,” said Frank Maly, ACT director of commercial vehicle transportation analysis and research.

Great Dane, the No. 4 trailer builder, said COVID-related historic lows in April and May led to confidence in placing orders for a strong holiday season lasting into 2021.

“That’s exactly what has occurred,” Great Dane executive vice president of sales Chris Hammond told FreightWaves. “We are optimistic that 2021 will be a bigger build year in all the major segments we serve as our customers are seeing shipping rates increase.”

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Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.