A welder on the Stoughton Trailers production line. (Stoughton Trailers)
key takeaways:
- ACT Research and FTR reported that US trailer orders increased more than 200% year over year in May to nearly 20,000 units.
- Analysts and leasing executives said replacement demand, dry van normalization and flatbed demand beat seasonal expectations as they offset weak freighter demand.
- Analysts said the final month of Q2 and Q3 remains uncertain as tariffs, rising prices and tight build slots could impact order flows.
Despite historically slow conditions expected for May, US trailer orders came in well above last year’s results, increasing 237%.
ACT Research report initial net data This shows that orders have increased to 20,700 units compared to last year’s weak results. They were also up 7% from April. The report said a gradual decline in net orders is generally expected, with May traditionally being the second weakest order month of the annual cycle. But ACT also suspects that the current cycle has been delayed by a few months.
“The increase in orders that should have started in September or October last year actually didn’t start until December, but may now be getting a boost from rising freight rates,” said Jennifer McNally, director of commercial vehicle market research for ACT. “The increase in orders is certainly welcome, but caution remains a strategy for some trailer buyers.”
In its last two reports, ACT Research has questioned whether there will be more high-side surprises in order intake, given the pickup in freight rates and rising carrier confidence, or whether traditional Q2 order weakness will persist. But this also came as fleet decision-makers continued to hesitate in placing trailer orders even as they accelerated tractor purchases.
“Based on the May data, we now know there is at least a good month’s worth of orders in the pipeline,” McNally said. “But it remains to be seen how the final month of Q2, as well as Q3, will play out.”
(ACT Research)
FTR Transportation Intelligence reports preliminary results It showed that trailer orders increased by 249% year-on-year to 20,189 units. They were also up 1% from last month. The report reiterated that last year’s results were quite weak. They were also above the 10-year average of 11,649, indicating a better-than-season pace in the late spring.
“The market still doesn’t appear to be entering a broad-based upcycle, especially with seasonally slow orders months,” said Dan Moyer, senior analyst for commercial vehicles at FTR. “Demand remains concentrated in replacement activity, fleet-specific needs and dry van generalization, rather than broad capacity expansion.”
Moyer said these results were driven by solid flatbed demand. But he also noted that cost pressures are increasing, reflected in a sharp increase in the already high producer price index for truck trailers and chassis.
(FTR Transportation Intelligence)
“Recent changes in how Section 232 tariffs are applied mean higher overall tariffs on trailers, and upcoming antidumping/countervailing duty exposure for van-type trailers and subassemblies could add more costs on top of the Section 232 tariffs,” Moyer said. “This situation could create opportunities for domestic manufacturers and suppliers.”
Those opportunities could also tighten build slots, extend lead times and put pressure on the supply of components or labor, Moyer said. He said this could result in stronger domestic pricing and less consistent order flow, even without a broad increase in underlying trailer demand.
“May was a solid month for us from a leasing perspective,” said Brandon Larson, vice president of trailer leasing at Transportation Enterprise Leasing. “But it feels like capacity is tight, even though freight demand is not picking up.”
Lyerson sees this as evidence of how strong replacement demand has been. He said many trailers were produced around 2015, at the peak of the last trailer market cycle. Those trailers are beginning to age, with many still requiring replacement regardless of freight demand. Lyerson has seen this trend in how many of his customers are moving to new trailers.
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“Most shippers won’t load trailers older than 10 years,” Larson said. “This forced replacement that’s going on right now is really what’s driving most of it. I think if you look at the more sophisticated carriers and operators, they know there are good deals to be had on 2-, 3- to 5-year-old trailers that are every bit as good as a new trailer.”
Larson said it’s less sophisticated carriers that have driven demand for new trailers, especially those that haul mostly freight for brokers. He said it is the brokers who have put pressure on their carriers to not let their trailers get so old.
“When you have 185,000 trailers that are aging at the same time, even if the demand isn’t high, it still reduces capacity substantially,” Larson said. “Leasing on new equipment is attractive right now because most equipment lessors have locked in their pricing.”
Larson said fleets know trailer prices have already increased this year and are expected to increase further in the second half. He suspects this has helped spur some pushback among those looking for more attractive lease offers before costs rise.
“Manufacturer production slots are filled or nearly filled,” Larson said. “You have to take it with a little caution, it’s not because freight traffic has increased. It’s really just all these drivers that have left the market.”
