The ordering frenzy for new trailers came to an abrupt halt in May as fleets heeded manufacturers’ pleas to avoid placing bookings they could not build.
But boy, wait ’til next year.
“The market is in a strange place right now in that the bucket for 2021 orders is almost full, but the bucket in 2022 is essentially empty,” said Don Ake, FTR Transportation Intelligence vice president of commercial vehicles. “We expect abnormally low activity until the 2022 order boards are opened. At that point, orders should shoot back up to near-record levels.
Net trailer orders in May totaled 8,676 units, down nearly 40% from April but more than 165% higher compared to the COVID-impacted May of 2020, according to ACT Research.
FTR pegged final net trailer orders at 9,500 units, 42% below April. Year-over-year comparisons were up 112%. The rolling 12-month number for trailer orders stood at 368,000.
Trailer manufacturers paused accepting orders after the backlog grew to nine to 11 months from order to delivery. Like many manufacturing businesses, trailer makers are struggling to find workers after shedding headcount during the early months of the pandemic in 2020.
“Getting people back has just been a challenge,” Chris Hammond, executive vice president of sales at Great Dane, told FreightWaves during a May 27 interview in his office in Savannah, Georgia. “We lost some to different industries. Labor participation is lower than it was, and that affects everybody.”
“Getting people back has just been a challenge. We lost some to different industries. Labor participation is lower than it was, and that affects everybody.”Chris Hammond, executive vice president of sales at Great Dane
There is no waning demand, according to Frank Maly, ACT director of commercial vehicle transportation analysis and research.
ACT’s U.S. Tractor Dashboard for June, which measures the potential strength of the tractor market, rose to its maximum value of 15. That means strong conditions exist across the entire commercial vehicle market, Maly said.
Right now, it is a waiting game on several fronts. What will happen to spiking commodity prices for key items like steel and aluminum? Trailer manufacturers are loath to begin writing orders for 2022 until they have better visibility on commodity prices and can accurately quote the cost of new equipment.
“Orders will again begin to flow once OEMs are satisfied that materials/component pricing and supply, along with adequate staff, are in place to allow them to make further 2022 production commitments and satisfy robust fleet demand,” Maly said.
One ongoing challenge for manufacturers is to ramp production in response to robust fleet demand, which is evident in nine- to 11-month backlog-to-build times since December.
Even with a slight improvement in backlog-to-build rates to 9.1 months in May, the industry is essentially sold out through next March. Dry vans and refrigerated trailers extend into April and May, respectively, Maly said.
No record pace
“We’re not building at a record pace this year because of getting people into the plants, challenges of getting all these things that are scarce right now,” Hammond said. “So, it’s pushing that demand out.”
The weak order numbers for May suggest some fleets are adjusting their requirements due to extended lead times.
“Freight growth remains robust. Fleets continue to need more trailers than can be produced in the short term,” Ake said.”The environment is expected to improve in the second half of the year but will still impact the industry well into 2022.”