Two organizations responsible for tracking and analyzing data about the U.S. commercial motor vehicle market both note that trailer orders have declined for November as compared to October. A cautious approach to truck ordering is likely connected to the decline in trailer sales, according to leaders of both research organizations.
FTR Transportation Intelligence reports that preliminary trailer orders for November is at 20,200 units, with is a 34% decrease from October, as fleets are becoming more cautious about freight conditions in 2020. On a year-over-year comparison, orders were also down 55% from November 2018, when limits on OEM capacity resulted in carriers placing huge orders to lock in build slots throughout 2019. Trailer orders for the last twelve months total 215,000 units.
“Fleets are being more cautious with their truck orders, so it makes sense that trailer orders would follow suit,” said Don Ake, FTR vice president of commercial vehicles. “There is no reason to order in large quantities like last year. The supply of trailers has almost caught up with the demand for trailers, so ordering levels are flattening out and fleets are watching the market closely. There is still too much uncertainty regarding the economy, trade, tariffs and politics for companies to have a great deal of confidence right now for 2020.”
OEMs have plenty of capacity to handle a more stable freight and trailer demand environment in 2020, so fleets are placing smaller orders and only ordering a few months out. Production continues to fall moderately on a per-day level, as freight growth has stalled. There is still a decent demand for dry vans and reefers, but the vocational segments, especially flatbeds, continue to weaken.
“It is expected that orders will track in this range for a while, as fleets continue to place modest-sized orders for short-term needs,” Ake said. “OEM lead times are much shorter than a year ago, so ordering patterns will be much different, and more stable, than last year’s cycle.”
ACT Research’s preliminary estimate for November indicates that trailer manufacturers booked 19,500 net orders to their order boards last month, which is a 39% decline from October’s volume. Activity was 56% below November of 2018, while year-to-date net orders are just under half that of last year.
“The sequential decline in November broke a four-month streak of monthly gains,” said Frank Maly, Director of CV Transportation Analysis and Research at ACT Research. “That ran counter to the industry’s normal order patterns, which point to November typically ranking as the best order month of the year.”
Before accounting for cancellations, new orders of 21,100 trailers were off 43% month-over-month and 54% below last year. Although a final volume report is not yet available, this preliminary market estimate is expected to be within +/- 3% of the final order tally.
“The cautious stance toward 2020 cap-ex spending is evident in both the level and pattern of fleet trailer orders as we approach year-end,” Maly said.
In this data, however, a decrease in cancellations for November as compared to the month before is a positive indicator for the year to come.
“One positive take-away from the November stats is a significant easing in cancellations compared to previous months,” Maly said. “That’s an indication that, while lower, the commitments on the order board appear to be firming as we close the year. Discussions with trailer OEMs also indicate that, although they are encountering pricing pressure, quote activity remains solid, so any change in fleet confidence could quickly result in an order rebound.”
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