Falling trailer bookings track muted tractor orders

Wabash dry van trailers in holding area

Trailer orders sputtered again in December to close the year at just over 200,000 units, less than half the year-ago output.

The caution of fleets in placing orders points to a much softer but historically sound build level in 2020.

“Fleets are expected to continue to replace old trailers based on their standard trade-in cycles,” said Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence. “Van trailers sales, spurred by strong consumer spending, are still doing better than the vocational segments.”

Preliminary orders of 16,500 in the last month of 2019 were the lowest since August. They were off 17% compared with November and down 41% compared with December 2018, according to FTR. 

Eight-year low

ACT Research said preliminary bookings for December were 17,200, down 13% from November and off 37% year over year. For all of 2019, 205,000 orders were placed, down 51% from 2018 and the lowest annual order volume since 2011. Before accounting for cancellations, 2019 orders were 244,000, ACT said.

Five-year trailer order chart from SONAR
A five-year look at van, refrigerated and flatbed trailer orders. (FreightWaves/SONAR)

Month-over-month comparisons don’t tell a complete picture, said Dustin Smith, senior vice president of Commercial Trailer Products at Wabash National Corp.

“We get so caught up in a headline,” he said. “If this industry was as easy as every customer reducing their order by 13%, that would make life easy. But it doesn’t work that way. Some of our customers are continuing to grow. Some might take a break for a year.”

Cautious ordering

Fleets are displaying the same caution on trailers as they are showing in ordering Class 8 tractors, which closed 2019 at a 10-year low. The backlog of trailers waiting to be built fell for 11 of 12 months in 2019.

Large carriers are placing smaller orders for trailers with shorter lead times than is typical at the end of a calendar year, FTR said.  

2020 uncertainty

“A great deal of uncertainty exists at the start of 2020 due to a weaker manufacturing segment, the drag of tariffs and a tumultuous political situation,” Ake said. “Buyer nervousness is expected to increase throughout the year due to the upcoming election and conflict in the Middle East.”

Freight is expected to grow about 1% this year, which means the extra trailers ordered in recent years are unnecessary. Some of the capacity expansion resulted from extra money businesses had following federal tax cuts in 2018. 

“Trailer orders should stay in the 20,000-unit-a-month range for a while, as fleets continue to match orders with short-term demand,” Ake said. “Eventually, the manufacturing sector should recover, generating more orders for flatbed and dump trailers.”

Dealer inventories also are a concern for the new year,  Maly said. 

“While inventory did decline as the year closed, the reduction in December was less than would normally be expected,” he said. “That overhang will cause some further challenges to the industry during early 2020.”