New trailer orders slid to their lowest in several months in April as manufacturers warned fleets away from booking orders they cannot build for the rest of the year.
Preliminary reports from trailer manufacturers compiled by ACT Research point to 14,400 new trailer orders in April, 52% below March. But reservations soared 3,600% above April 2020 when practically no trailer orders were placed because of pandemic shutdowns.
The year-over-year number is all but meaningless in predicting the industry’s direction, said Frank Maly, ACT Research director of commercial vehicle transportation analysis.
Year to date, trailer orders are up 164%, and manufacturers are solidly booked for the rest of the year.
“All products are sold out for 2021,” Sean Kenney, chief sales officer for market leader Hyundai Translead, told FreightWaves.
No. 4 manufacturer Great Dane could squeeze out a few more flatbeds in the fourth quarter. But forget about dry and refrigerated vans, Chris Hammond, executive vice president of sales, told FreightWaves.
After months of orders seeking to add trailer capacity to handle the burgeoning demand for consumer goods, the slowdown was expected. Fleets have ordered 102,000 trailers for the first four months of the year. At that pace, orders would top 300,000, exceeding the strong orders of 297,000 last year.
“I don’t necessarily think the April data captures the sentiment,” Hammond said. “Many trailer manufacturers have held off taking orders since their backlogs already extend to the end of the year. Once the order books open, I suspect we will see order data improve.”
Volatile commodity prices
Manufacturers won’t resume taking orders until they have better clarity on how to set prices. Steel is three times higher than normal. Aluminum is expensive and scarce. Wood used for trailer floors is in tight supply. Some vendor-supplied components are also troublesome, Hammond said.
Still, he said, Great Dane may open its 2022 order books in 30 to 60 days.
“We really need to see stability in supply capacity and the commodity markets before we venture too far into 2022,” Kenney said. “Having weathered what we have as an industry, we owe it to our customers to be ‘right not early’ when it comes to capacity and promises for 2022.
“The raw input commodities are too volatile and the supply chain capacity needs time to stabilize.”
Strong fleet commitments have pushed the average backlog for dry vans and reefers into the second quarter of 2022 at recent production rates, Maly said, adding that ACT projects record trailer production in 2022.
Filling production jobs is challenging as America reopens, but neither manufacturer reported significant production losses.
“We have been holding our own when it comes to this aspect of the business,” Kenney said. “We have heroes every day who work very hard to keep the lines supplied with components. Were it not for their dedication, we would certainly have unavoidable stoppages.”
Great Dane is recruiting at all nine of its plants, Hammond said. “All lines are running, but some plants are limited by supply and labor shortages.”