Trailer demand remains weak

Trailer demand remains weak

This may be the worst of times for commercial truck trailer sales -- and the worst of times is expected to continue well into 2010, according to a variety of sources

This may be the worst of times for commercial truck trailer sales -- and the worst of times is expected to continue well into 2010, according to a variety of sources.

Eric Starks, president of research firm FTR Associates, predicts that trailer production should remain at "depressed levels" through the end of 2009 and only see a modest recovery next year. He forecasts that a large oversupply of trailers will act as a continuing drag on new trailer demand, resulting in very weak total 2009 production numbers of 70,000 units for the industry as a whole, improving only modestly to 89,000 units in 2010.

"At the moment transport demand is so weak that in fact the trucking industry as a whole actually does not need any new trailers at all," he said during a speech at the annual meeting of the Truck Trailer Manufacturers Association (TTMA) earlier this month.

Trailer OEMs are being hammered by such low levels of demand. Wabash National Corp., for example, reported a net loss of $28.3 million on net sales of $77.9 million during the first quarter this year, compared to a net loss of $6.4 million on net sales of $161.1 million over the same period in 2008.

Dick Giromini, Wabash's president and CEO, said in the company's earnings statement that its new trailer sales in the first quarter this year totaled just 2,700 units, representing a 57% reduction from the same period in 2008.

"The volume decline reflects the current economic environment and the continuing challenges facing the transportation industry," he noted. "Results for the first quarter … while disappointing, were not surprising. The challenging economic climate has resulted in weak production demand, and the carryover effect of very high raw material and component costs adversely impacted our operating results."

Even sales of used trailers are slumping, according to truckload carrier Werner Enterprises. In its first quarter earnings report, the company reported that its wholly-owned subsidiary, Fleet Truck Sales, showed sales of assets -- primarily used trucks and trailers -- decreased to just $700,000 in the first quarter of this year, compared to $3.7 million in the first quarter of 2008. Werner said it sold fewer trailers due to the effect of the softer freight market and experienced lower buyer demand for used trucks as well.

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