U.S. trailer orders rose a head-snapping 333% in June over May as the improving freight market encouraged fleets to spend money on equipment.
Orders of 13,441 units beat June 2019 by 112% after removing canceled orders, according to ACT Research.
“June was much better than previous months and July is shaping up to be even stronger,” said Sean Kenney, a spokesman for trailer builder Hyundai Translead.
“Many customers have re-engaged and are responding to the current freight environment,” Kenney said of the No. 1 maker of dry vans. “While nobody is willing to say that this is behind us, there is growing optimism that things are improving for the better overall.”
A V-shaped recovery – for now
The order surge created, at least for the moment, a V-shaped recovery from April when orders practically zeroed out. Shelter-in-place orders from the coronavirus pandemic shut down almost all manufacturing.
Subtracting canceled orders, new orders rose 117% over May and 41% year-over-year.
“Discussions indicated that large fleet orders helped drive June results, meaning improvement is generally not spread evenly across all [manufacturers]. And we expect that choppiness to continue as we move through the summer,” said Frank Maly, ACT director of commercial vehicle analysis and research.
The recovery may be short-lived depending on whether the truck and trailer manufacturing can power through uncertainties. They include the nation’s high unemployment rate, the shape of the next round of federal stimulus, and rising COVID-19 infection rates that could lead states to reimpose restrictions.
“The biggest worry is what impact does that have on the consumer and industrial economies,” said Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence. “There are a lot of question marks going forward.”
A resilient trailer industry
The truck and trailer industry “is pretty representative of heavy-duty manufacturing in the country,” Ake told FreightWaves. “[They] are leading indicators for the economy and all that news is good. But there is still uncertainty.”
FTR reports its trailer order estimates Thursday. Expect little change to its production estimate of 189,000 trailers, Ake said. The FTR estimate bottomed out at 155,000 in April.
“The difference is that on the truck side, all the factories shut down for April and much of May. But the trailer people kept building,” Ake said. “I was really impressed with how the trailer manufacturers managed their shutdown. The industry kept producing at a decent rate under the circumstances.”
Business failures in the resilient trailer industry seem unlikely, Ake said,
“If it was going to happen in any segment, small flatbed manufacturers are the ones who are most stressed,” he said.