Net trailer orders in September slumped to 12,950 units, down 16% from August, according to data tracked by ACT Research Co. And while year-over-year comparisons are difficult due to the “high bar” set for order intake in September 2015, the firm believes the current track for trailer orders does not bode well for the future.
“This shows September volume approximately 65% below the same month last year,” noted Frank Maly, ACT’s director of CV transportation analysis & research, in a statement.
“It is apparent that the 2016/2017 trailer order season has stumbled out of the gates to a very slow start,” he added. “The caution frequently expressed by fleets regarding equipment investment this order cycle is very evident in September’s volume.”
Michael Baudendistel, vice president of the Stifel Transportation & Logistics Research Group, pointed out in a statement that September’s results were “below expectations” as the firm thought orders would be up modestly sequentially due to seasonality.
“But we are not entirely surprised to see the slow start to early-fall orders, as we have long believed semi-trailer orders could only 'defy gravity' for so long in outperforming Class 8 markets, as was the case last fall and through spring of this year,” he noted.
Baudendistel added that September’s order rate of 12,950 units is the weakest September order total since 2009, though he stressed that “one month does not a trend make.”
As a result, Stifel is lowering its 2017 production estimate from 250,00 units down to 235,000 units – a 20% year-over-year cut – which is slightly below ACT's forecast of roughly 240,000 units.
“We are increasing our 2018 production estimate slightly, from 215,000 to 225,000 units, largely to reflect a shift in production from 2017 to 2018,” Baudendistel pointed out. “Our 2018 estimate remains considerably below ACT's estimate of roughly 245,000 units.”
Research firm FTR posted even lower preliminary September net trailer order numbers at 11,800 units, down 16% month-over-month and 66% year-over-year.
Dry van orders fell even further than overall trailer orders, dropping 43% month-over-month and 80% year-over-year, noted Don Ake, FTR’s vice president of commercial vehicles.
“The lower order rate in September is consistent with a cooling market in 2017,” Ake said in a statement. “Fleets are uncertain and nervous about freight demand and declining profits. They are not going to place huge orders covering demand for the next 12 months, as they have the last two years.”
In spite of falling orders, trailer build rates were up 10% per day in September over August, FTR noted, with lower-than-expected orders and stronger build rates resulted in the trailer industry’s production backlog dipping below 100,000 units for the first time since January 2014. .
As a result, “lead times are much more reasonable, so fleets will evaluate their needs on a month-to-month basis for a while,” said Ake. “This means order rates should come in line with production fairly soon.”
He also emphasized that September trailer production turned out to be “surprisingly strong” after two noticeable weaker months in July and August.
“Some OEMs boosted production after the vacation breaks, and there were also more pup trailers built for package carriers in anticipation of the holiday-shipping season,” Ake noted. “Factory shipments were way up, cutting into bloated inventories. So this is a positive sign for trucking in the fourth quarter.”