Truckload profitability helps sparks trailer sales rebound

July 23, 2010
Trailer orders – especially for dry-van models – are spiking due in large part to improved profitability within the truckload (TL) sector, which is allowing motor carriers to invest in new equipment

Trailer orders – especially for dry-van models – are spiking due in large part to improved profitability within the truckload (TL) sector, which is allowing motor carriers to invest in new equipment.

According to ACT Research Co. (ACT), net orders for commercial trailer were up 103% in June compared to the same month in 2009. Year-to-date net orders for trailers through June are up 74%, the firm noted.

ACT pointed out that dry van orders – a segment hit hard in 2009 – were very strong in June, especially since it’s normally a seasonally slow month for trailer orders. Year-to-date, dry van net orders are up 164%. Reefer van net orders, which held up fairly well during the recession, are up 5% on a year-to-date basis, the firm said.

“TL carrier profitability is the key to improved orders of commercial vehicles,” explained John Burton, ACT vp. “Initial reports from publicly traded TL carriers are confirming the healthy rebound we have been sensing in the trucking sector. With capital expenditures muted the past two years, carriers are beginning to show some profits and are reinvesting in their fleets.”

As an example of such reinvestment, TL carrier USA Truck said it plans to place in-service approximately 285 previously purchased new tractors equipped with pre-2010 emission engines between July and October of this year-- and it intends to buy an additional 300 to 500 new tractors to be placed in-service between November and May 2011.

“[This] reflects our outlook for industry conditions, which are presently characterized by a considerable shortage of capacity,” said Clifton Beckham, USA Truck president & CEO, in the carrier’s second-quarter earnings report.

“This tight capacity environment has been growing steadily tighter since mid-February when we believe freight demand experienced a systemic improvement as businesses began to restock inventory in response to unsustainably low inventory levels,” Beckham noted.

USA Truck posted $900,000 in earnings on base revenue of $94.9 million for the second quarter, compared to a net loss of $1.1 million and $81.2 million in revenues during the same period last year. However, for the first half of 2010, USA Truck lost $2.1 million despite 12.2% increase in revenue to $184.1 million compared to the first six months of 2009 – still an improvement over the $3 million it lost during the first half of last year.

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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