Weak freight rates continue to reduce carriers’ willingness to invest in equipment, resulting in low trailer orders and high cancellations in January, according to this month’s issue of ACT Research’s State of the Industry: U.S. Trailers report.
January net orders, at 13,700 units, were nearly 43% lower y/y, and 10.7k units below December. Total cancellations took a turn for the worse in January, jumping to 3.2% of the backlog from December’s elevated 1.7% rate.
“Seasonally adjusted, January’s orders fell to 12,400 units from December’s 15,400 SA rate. On that basis, orders decreased 28% m/m,” said Jennifer McNealy, Director–CV Market Research & Publications at ACT Research. “On a seasonally adjusted basis, dry van orders contracted 55% y/y, with reefers down 37%, and flats 34% lower compared to January 2023.”
She added, “Digging down into cancellations, several markets led the way, including dry vans at 4.2% of backlog and lowbeds at 1.5%. Clearly, with markets swimming in capacity, no one needs a higher trailer-to-tractor ratio. Additionally, both tank categories reported high cancels this month, with liquid at 3.7% and bulk at 10.2%. We continue to believe recent oil price weakness may bear most of the culpability there.”
McNealy concluded, “Healthy economic performance is increasingly favoring freight, but we are roughly balanced between the tail of an 18-month freight recession and the beginning of the next freight cycle, meaning limited capex available even with some dealers still challenged with more inventory than customers.”
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.
January’s preliminary net trailer orders decreased nominally from December to January. At 13,700 units, orders were lower compared to last January, down nearly 43% y/y. As we’re still in peak order season, seasonal adjustment (SA) lowers January’s tally moderately, to 12,400 units. Final January results will be available later this month. This preliminary market estimate should be within +/-5% of the final order tally.
“With the pent-up demand enjoyed by the industry during the past few years largely extinguished, a softer opening to 2024 meets expectations,” said Jennifer McNealy, Director CV Market Research & Publications at ACT Research. She added, “Net orders are being challenged by a backdrop of weak profitability for for-hire truckers, and anecdotal commentary from trailer manufacturers throughout the past several months have been indicating this slowing, as they have shared that orders are coming but not at the same rapid pace that they have the last few years.”
McNealy continued, “This month’s results continue to support our thesis that when fleets don’t make money, their ability and/or willingness to purchase equipment is muted. That said, the lower orders don’t indicate a catastrophic year in the offing, simply one that is on target to be less stellar than we’ve seen recently.”
She added, “Another indicator being watched closely is cancellations, which oscillated above comfortable levels for most segments in January. While the industry’s largest segments are under pressure, some specialty segments have no available build slots until late in 2024 at the earliest, while others are in the three-month range.”
- Orders: 13,700 units (-43% y/y)
- Cancellations: 3.2% of backlog
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