Trailer market on the high road into 2015

Sept. 11, 2014

INDIANAPOLIS.  Presenting next year’s trailer outlook here at the FTR Transportation Conference, Don Ake, vp-- Commercial Vehicles for FTR, began by detailing how hot the market is right now.

 “The trailer market in 2014 is very strong,” he stated, “with market growth the result of both fleet expansion [to add capacity] and pent-up demand [to replace aging equipment

According to Ake, the current strength of the trailer market is evident by these figures:

  • Net orders over the last 12 months stand at 284,000 units
  • Production has been up 13% (per day) since April
  • 2014’s build forecast calls for 264,000 units, which would be the highest since the 280,000-unit mark set in 2006
  • Backlogs numbered 112,000 units in July—which is up 47% year over year (YoY)

Ake said trailer demand will continue to be strong next year. But he cautioned that there’s a specific issue bedeviling the forecasting of 2015 trailer production.

“Right now, trailer makers should be building more [based on demand],” he explained. “But they are having trouble adding capacity. This is especially the case with tank builders, as they require the most specialized workers.

“So,” said Ake, “we expect the peak demand occurring in 2014 will ‘roll over’ into 2015. If that does happen, then some 10,000 more units may be added to our production forecast.

“To be sure” he continued, “2015 will be an interesting year. The industry may find itself in a unique situation--- a good unique situation. And any rollover of demand will make Q1 of next year stronger than its should be.”

Will all that said, he advised that FTR is currently forecasting U.S. commercial-trailer production will reach 248,000 units in 2015 (with total North American production coming in at 274,000 units).

Ake also presented FTR’s trailer-production forecast by vehicle segment, listing number of units and percent change:

  • Dry van          144,000    (-5.0%)
  • Reefer              37,500    (-5.0%)
  • Flatbed             23,500    (-5.0%)
  • Dumps                9,000    (-13%)
  • Liquid tank         8,100    (-4.0%)
  • Dry tank              3,000    (-17%)

Beyond the impact of rollover demand, Ake pointed out that there is “upside potential” to FTR’s current forecast if the Class 8 truck market “remains hot” and/or if economic and freight growth accelerate.

However, he noted as well that there is “downside potential if [it turns out] the Class 8 market is over-inflated or the economy stalls.”

On hand to provide a trailer OEM’s perspective on the market was Dick Giromini, president & CEO of Wabash National Corp.

He said to expect “strong trailer demand that is above replacement levels” – and not just into next year—but “for the next five years.”

As Giromini sees it, this positive and continuing trend is being driven by three not entirely upbeat factors that are influencing fleet purchasing:

  1. Equipment that is aging to the point that the average trailer lifecycle “remains near record highs”
  1. “Active truck utilization that has reached 99% and is expected to stay elevated” is leading fleets to add capacity
  1. Fleets needing to update equipment to be in compliance with various regulations (such as CARB limits) or to make up for productivity/utilization losses from rules (HOS) and/or to ensure drivers that trailer condition/maintenance  will not impact their livelihoods (CSA scores)

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