Trailer orders continue down swing, but trend not sign of problem

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ACT Research says year-to-date net orders through April were just over 80,000 units, down 37% from last year. (Courtesy: GREAT DANE))

The two major organizations that collect and analyze commercial vehicle data report that trailer orders remain subdued, but also indicate the lower numbers are not necessarily indicative of a problem.

ACT Research’s Frank Maly, director-CV transportation analysis and research, said that trailer industry net orders have eased meaningfully since November of 2018, as year-over-year-comparisons have now been in the red for the last five months, but that the order weakness is not indicative of fleets’ unwillingness to invest.

Don Ake, FTR vice president of commercial vehicles, said the low order level does not in any way reflect a softening of demand, but rather the fact that many large OEM’s have filled their order boards for 2019. Backlogs remain hefty, with robust production levels. Trailers orders for the past 12 months now total 364,000 units, he said.

“Year-to-date net orders through April were just over 80,000 units, down 37% from last year, but despite this, current orderboards still stretch to nearly year-end for the total industry,” Maly said. “Order weakness is more a symptom of OEM reticence to fully open 2020 orderboards than fleets’ unwillingness to invest, as we’re hearing of OEMs actively gathering ‘verbal commitments’ for the first half of 2020, with some orders reportedly being posted as ‘price pending’.”

Maly said softer new orders have been joined by higher cancellations in recent months, despite widespread implementation of cancellation penalties.

“However, trailer production continues at robust levels, with March of 2019 as the second highest production month in industry history,” he said. “ACT anticipates strong production levels through the remainder of this year, but see OEMs continuing to be challenged by component and material issues, as well as staffing.”

FTR reported preliminary trailer orders for April 2019 remained subdued for the second consecutive month coming in at 13,200 units, which is 40% below the same month in 2018.

“We expect the backlogs to remain very healthy, supporting continued high build rates,” Ake said. “Orders likely will stay at low volumes through the summer, or until OEMs open the 2020 order boards. OEMs have been cautious about taking longer-term orders due to uncertainty over future costs. Right now, the Chinese tariff situation is just adding to an already cloudy outlook.”

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