At this point, the trailer industry is looking for any good news.
And it came today in the form of a 21.8% increase in total trailers shipped in the second quarter over the first quarter, led by a 33% increase in dry freight trailers (up to 16,000 from 12,000), according to figures released by Economic Planning Associates Inc.
In the non-van sector, the construction-oriented dump (34.6%) and platform (26.1%) trailers were most improved over the first quarter. Low-bed trailers were up 7% while tank trailers stayed the same and bulk trailers fell by 6.3%.
The bad news: All major trailer segments except dumps were running behind the second quarter of 2001. Dumps were up 29.6% (from 1,350 to 1,750)but all others showed declines: dry freight (20%), insulated (20.4%), drop frame (21.1%), platform (18.3%), tank (13%), and low bed (28.1%). Total trailers were down 17.9%.
On the positive side, the year-over-year declines moderated for the second consecutive quarter, which Peter Toja, president of Economic Planning Associates said indicates “we are approaching the end of the downward phase" of the current trailer cycle.
“From this point on, we anticipate further, albeit modest, improvements in trailer shipments,” Toja said. “With consumer spending advancing, housing starts at high levels, construction activities moving up, manufacturing advancing, production of capital equipment reviving, imports on the rise, and exports poised to rebound, both trailer loadings and intermodal traffic will move into higher territories during the remainder of this year and throughout 2003.
“After spending twelve to fifteen months dramatically reducing inventories, the continued gains in consumer outlays are now stimulating a modest buildup of inventories at both the retail and wholesale levels," he continued. "As a result, consumer durable and nondurable manufacturers are in the enviable position of not only producing for growth in final demand but also to replenish depleted inventories in the pipeline. This increase in final product demand will also have the added benefit of expanding traffic flows involving raw materials, intermediate products, and componentry associated with these consumer products."
Toja said "this will be a constructive environment for a variety of trailer equipment. Besides boosting domestic production, further gains in consumer purchases will also stimulate stronger growth in merchandise imports and intermodal container movements,” he added.
According to Toja, heightened levels of construction activities in general and housing starts in particular, should awaken demand for equipment such as low beds, platforms, and dumps.
Toja said that due to a weak start and the stringent financial environment facing truckers, trailer shipments for all of 2002 likely will decline for the third consecutive year -- he anticipates a 10% drop -- before rebounding in 2003.