Trailer manufacturers are tapping the brakes as the traditional order season opens amid uncertainty over parts availability and volatile commodity prices, which are being added to the invoices for new trailers when they are produced.
“We have implemented pass-through commodity pricing [for 2022] with many trailer customers,” Mike Pettit, CFO of Wabash, said on the company’s Nov. 9 earnings call. “Pricing recovery from commodity headwinds experienced in 2021 had been effective and we expect average selling prices for trailers to increase in the range of $5,000 to $6,000 year-over-year.”
Higher prices may be holding down new orders, though demand for additional equipment remains whit hot, according to FTR Transportation Intelligence, which pegged October bookings at just 16,800 orders, down 41% from September and off 70% from a record high in October 2020. Trailer orders are averaging 277,000 on a rolling 12-month basis, FTR said.
Most manufacturers held back on slotting 2022 commitments because of a clogged supply chain. Orders scheduled for production in Q4 this year have been pushed into the first half of 2022. Manufacturers have to strike a balance between how many additional orders they can realistically build against burgeoning backlogs.
Backlog committed but orders on hold
“Great Dane’s backlog is committed for 2022 although the orders are not placed as we manage through the challenges of getting labor and materials to the plants,” Chris Hammond, Great Dane executive vice president of sales, told FreightWaves. “We will build everything we can in 2022 based on constraints.
“Great Dane is providing directional pricing for the first part of 2022, firming up final pricing several weeks prior to trailers starting down the line.”
Don Ake, FTR vice president of commercial vehicles, said fleets that want to place orders are being held to placing orders a month or two at a time.
“The challenge for many OEMs is not to acquire more backlog, but to manage the backlog they have,” Ake said. “Order numbers continue to understate the true demand.”
Frank Maly, ACT Research director of commercial vehicle transportation analysis and research, said the normal ordering season is anything but normal.
“Challenges of supply-chain bottlenecks, labor shortages, and material and component prices are forcing OEMs to proceed very cautiously,” he said.
“Initial reports indicate that October build rates were similar to September. So OEMs, while able to maintain production levels and manage backlog horizons, continue to be unable to ramp efforts to meet the extremely strong and growing fleet demand for additional trailers.”