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Month-over-month trailer order recovery suggests possible return to normalcy

Payback for a record run of new trailer orders last summer continued in July with fewer than 10,000 new orders placed, a dramatic drop from the same month in 2018.

Low orders, typical during summer months, suggest a possible return to normal order patterns after an overheated second half in 2018.

FTR Transportation Intelligence reported preliminary trailer orders for July at 9,000 units, 68 percent below July 2018. ACT Research placed preliminary orders at 9,900, down 66 percent.

However, both firms said orders were dramatically higher than in June. FTR said orders were up 61 percent month over month. ACT said July orders were 65 percent higher than June.

ACT Research said preliminary trailer orders in July 2019 were 9,900, or 66 percent below the same month in 2018.

“The July order volumes demonstrate a possible return to normalcy in the equipment markets,” said Don Ake, FTR vice president of commercial vehicles.  

Record trailer orders in the second half of 2018 mirrored the fever pitch of Class 8 tractor orders. Fleets now are taking a wait-and-see approach to new orders while watching for signs of a general economic recession. The trucking sector already meets the definition of recession –  two consecutive quarters of negative growth. 

“We are experiencing the annual slow-down of orders typical every summer but exacerbated by an undeniable cooling in the market,” Stuart James, chief sales officer at Hyundai Translead, told FreightWaves.

Based on orders that spiked in the second half last year, van production is at near-record levels. Some easing of build rates is expected as backlogs fall to early 2018 levels. Trailer orders for the past 12 months now total 324,000 units, according to FTR.

“A few months ago, there was strong interest to push commitments into next year, but uncertainty over the economy, freight volumes and capacity have now caused many fleets to move to the sidelines as they reassess their true needs,” said Frank Maly, ACT director of commercial vehicle transportation analysis and research.

Purchasing managers are navigating the slowing rate of freight growth and the status of 10 percent tariffs on $300 billion of Chinese-made consumer goods. President Donald Trump has delayed implementation of the new tariffs from September 1 to December 15.

“There will be a few months of tough going for anyone that doesn’t have a healthy backlog, but I’d say hang in there because 2020 order activity should start soon,” James said.

Lackluster commitments for replacement trailers and capacity additions followed the opening of 2020 order boards, Maly said.

Hyundai Translead orders are mainly from dealers and equipment lessors, James said. 

“The fact that there have been virtually no cancellations at all this year until June makes June look especially bad,” he said. “But looking at the actual volume for the year, there is really very little to complain about.”