During the past six months, trailer manufacturers and major suppliers have largely indicated stable business conditions as compared to each prior month. Responses for May, relative to April, were in line with this trend. That said, this month’s discussions indicated softer demand for 2024 and mixed concern regarding the supply of labor, according to this month’s issue of ACT Research’s State of the Industry: U.S. Trailers report.
“The seasonally adjusted backlog-to-build ratio dropped 130 basis points m/m, to 6.9 months in April, from March’s 8.2-month level,” said Jennifer McNealy, Director–CV Market Research & Publications at ACT Research. “Seasonal adjustment takes dry van BL/BU to 7.1 months and reefers to 8.5, so either way one looks at it, with or without seasonal adjustment, and despite the improvement in build, this essentially commits the industry very close to year-end 2023.”
Evidencing continued improvements in supply-chain constraints, April’s build per day increased. That said, overall build was 13% lower m/m due to four fewer build days in April than in March. Production growth continues its upswing, and our projections point to a continuation of that trend.
McNealy concluded, “OEMs are reporting that their orderboards for 2023 are fully open, with most booked through the end of the year, and we are hearing that some trailer makers are taking orders into 2024. That said, several concerns are weighing on their minds, including the labor market, slowing demand into 2024, Fed hikes, business investment providing continued pressure on carrier profitability, recession risk, material supply availability and cost, and how all these factors are likely to impact dealer confidence.”
While the sky isn’t falling, there certainly are some clouds on the horizon that bear watching as we move through the remainder of 2023 and prepare for 2024.
ACT Research’s State of the Industry: U.S. Trailers report provides a monthly review of the current US trailer market statistics, as well as trailer OEM build plans and market indicators divided by all major trailer types, including backlogs, build, inventory, new orders, cancellations, net orders, and factory shipments. It is accompanied by a database that gives historical information from 1996 to the present, as well as a ready-to-use graph packet, to allow organizations in the trailer production supply chain, and those following the investment value of trailers, trailer OEMs, and suppliers to better understand the market.
ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis, and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.
According to this quarter’s issue of ACT Research’s Trailer Components & Raw Materials Forecast, OEMs are reporting that their orderboards for 2023 are fully open, with most booked through the end of the year (a few with spots still available in Q4), and some trailer makers are taking orders into 2024. That said, several concerns are weighing on their minds, including the tightening labor market, slowing demand into 2024, inflation pressuring consumer spending, business investment providing continued pressure on carrier profitability, recession risk, material supply availability and cost, and how all these factors are likely to impact dealer confidence.
“Build in the last three months (Feb-Apr) of 83,300 units, was more than 6% higher than the same three-month period last year, while net orders of 52,600 trailers was about 38% lower for the February to April 2023 period, versus the same three months in 2022,” said Jennifer McNealy, Director-CV Market Research & Publications at ACT Research. “Based on the same three-month comparison, backlog of 212,700 units this year was nearly 7% more than the 199,600 units pending production last year.”
McNealy concluded, “During the past six months, trailer manufacturers and major suppliers have largely indicated stable business conditions as compared to each prior month. Responses for May, relative to April, were in line with this trend.”
ACT’s US trailer forecasts, as well as its forecast of the components and raw materials needed to manufacture that equipment, is not only based on build, but on an ongoing secular shift and pent-up demand.
According to Eric Crawford, ACT’s Vice President & Senior Analyst, “For dry vans especially, there is a strong case for a secular shift to higher trailer/tractor ratios by big fleets and the creation of trailer pools by mega-brokerages. At its core, this shift stems from a desire to raise productivity and reduce expenses in the brokerage space.” He added, “In 2023, we forecast elevated build rates and relatively muted economic growth will cut into pent-up demand by ~25k units, leaving ~32k units of pent-up demand as we enter 2024. That said, we forecast pent-up demand will be more than satiated by year-end 2024, as our 165k dry van build forecast implies an over-build of ~13k units.”
ACT Research’s U.S. New Trailer Components & Materials Forecast provides those in the trailer production supply chain, as well as those who invest in said suppliers and commodities, with forecast quantities of components and raw materials required to support the trailer forecast for the coming five years. It includes near-term quarterly predictions for two years, while the latter three years of the forecast are shown in annual details. Additionally, analysis is segmented into two categories: those needed for the structural composition of new trailers and those used in the production of undercarriage assembly.
Final April Net Trailer Orders: 10,100 units (-41% m/m, -49% y/y)
April Backlog: -7% m/m, +7% y/y
April Backlog/Build Ratio: -130bps m/m to 6.9 months
Click here to learn more information about ACT's State of the Industry: U.S. Trailers.
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