Freight and transportation analysts FTR reported that preliminary trailer orders for November at 20,200 units fell 34% from October, as fleets are becoming more cautious about freight conditions in 2020. On a year-over-year comparison, orders were also down 55% from November 2018, when limits on OEM capacity resulted in carriers placing huge orders to lock in build slots throughout 2019.
The fall-off in orders comes as something of a shock to the trailer industry, which was enjoying record sales numbers until November. ACT Research reported last month that October trailer orders hit the highest level since November 2018, causing production backlogs to climb for the first time all year, according to a preliminary report from the analysts at FTR.
FTR tracked about 31,800 new orders in October, up 71% from the previous month. However, compared to October 2018, orders were down 42% as 2018 saw near record equipment orders.
Trailer orders for the last twelve months total 215,000 units, according to FTR.
FTR’s reporting tracks closely with ACT Research’s preliminary estimate for November. That transportation analytics firm’s findings indicate that trailer manufacturers booked 19.5k net orders to their orderboards last month, a 39% decline from October’s volume. Activity was 56% below November of 2018, while year-to-date net orders are just under half that of last year.
Before accounting for cancellations, ACT said, new orders of 21.1k trailers were off 43% month-over-month and 54% below last year. Final volume will be available later this week. This preliminary market estimate should be within +/- 3% of the final order tally.
“The sequential decline in November broke a four-month streak of monthly gains. That ran counter to the industry’s normal order patterns, which point to November typically ranking as the best order month of the year,” said Frank Maly, Director–CV Transportation Analysis and Research at ACT Research. He continued, “The cautious stance toward 2020 cap-ex spending is evident in both the level and pattern of fleet trailer orders as we approach year-end.”
Additionally, Maly said, “One positive take-away from the November stats is a significant easing in cancellations compared to previous months. That’s an indication that, while lower, the commitments on the orderboard appear to be firming as we close the year.” He added, “Discussions with trailer OEMs also indicate that, although they are encountering pricing pressure, quote activity remains solid, so any change in fleet confidence could quickly result in an order rebound.”
FTR analysts note OEMs have plenty of capacity to handle a more stable freight and trailer demand environment in 2020, so fleets are placing smaller orders and only ordering a few months out. Production continues to fall moderately on a per-day level, as freight growth has stalled. There is still a decent demand for dry vans and reefers, but the vocational segments, especially flatbeds, continue to weaken.
“Fleets are being more cautious with their truck orders, so it makes sense that trailer orders would follow suit,” said Don Ake, FTR vice president of commercial vehicles. “There is no reason to order in large quantities like last year. The supply of trailers has almost caught up with the demand for trailers, so ordering levels are flattening out and fleets are watching the market closely. There is still too much uncertainty regarding the economy, trade, tariffs and politics for companies to have a great deal of confidence right now for 2020.”
Ake said that while It is expected that orders will track in this range for a while, as fleets continue to place modest-sized orders for short-term needs. OEM lead times are much shorter than a year ago, so ordering patterns will be much different, and more stable, than last year’s cycle.