Editor’s Note: Updates with ACT Research commentary
Orders of new trailers plummeted 55% in March from the same month a year ago as an industry already struggling with tepid orders and excess inventory was hit by the coronavirus pandemic, according to FTR Transportation Intelligence.
Separately, Wabash National Corp (NYSE: WNC) said it was suspending production at its plants for two weeks to cope with lower demand.
FTR reported its preliminary count of trailer bookings in March was 6,500, 54% below an already depressed February count.
ACT Research reported higher preliminary orders of 7,600, down 51% versus March 2019 and down 14% month over month based on new orders of 13,200 before cancellations.
“As sobering as the figures are, they reflect pre-COVID market conditions, and with more than 40 states under some level of mandated shut down for most of April, those numbers will be even more significant,” said Frank Maly, ACT drector of Commercial Vehicle Transportation Analysis and Research.
Large orders canceled
Some large fleets canceled dry van orders that were spread out over the remainder of the year, FTR said. A pullback in trailer orders was expected this year after more than 650,000 trailers were produced in 2018 and 2019. Trailer orders for the past 12 months total 177,000 units.
“It is expected there will be some over-capacity in the short-term due to the enormous number of new trailers that entered the market in the last three years,” said Don Ake, FTR vice president of commercial vehicles.
“Some of those trailers will sit idle during this rough economic downturn,” he said. “They will go back into service gradually as things recover. However, this will limit new trailer demand for a while.”
The trailer market is mirroring the Class 8 tractor business; orders totaled 7,400 units in March, off 52% from the same month a year ago.
All segments suffer
Orders were particularly weak for dry vans and tepid for flatbeds. Refrigerated van orders also fell but less than the other segments.
“No doubt, March was a challenging month for the industry and was for Hyundai Translead as well,” spokesman Sean Kenney told FreightWaves. “March began similar to other months this year but ended with a lot of the broader ambiguity being echoed by our customer base.”
FTR expects trailer orders to track around the 10,000-unit mark for a few months.
“This is a severe wait-and-see situation with a potentially long wait period,” Ake said.
Production suspension
Wabash National, which designs and manufactures dry freight and refrigerated trailers, platform trailers, bulk tank trailers, and dry and refrigerated truck bodies, said its two-week company-wide furlough from April 20 to May 3 would idle all but customer support functions. Wabash had 6,900 employees as of December 31, 2019.
“We are taking the difficult, but necessary, decisions at all levels of the company to contain costs and preserve the strength of our balance sheet,” said Wabash President and CEO Brent Yeagy.
Hyundai Translead, among the largest of eight major trailer manufacturers, said it has avoided halting production so far.
“All Hyundai Translead facilities are running with appropriate safety measures in place,” spokesman Kenney said. “Future plans will continue to be dictated by the broader market and employee safety precautions.”
Great Dane did not respond to a request for comment as to whether it has or is taking any downtime.