Trailer orders declined 28% in July compared to June, extending the replacement equipment calendar further into 2023 as most manufacturers kept the brakes on bookings.
Fleets are waiting to place those orders. But most OEMs are not able to accurately price new equipment. Inflation and volatile commodity prices for key items like steel and aluminum frustrate those efforts.
Tighter credit, softening customer sentiment and persistent supply chain disruptions are headwinds for the industry. But orders over the past 12 months stand at a healthy 275,000 units, according to FTR Transportation Intelligence.
Eventually, manufacturers will have to take the plunge. When they do, pent-up demand for new equipment will result in a demand surge. Manufacturers such as Wabash are building in price protection. They want fleets to cover rising costs like premium shipping of parts needed to complete builds.
Pricing in rising inflation
“We still have additional inflation that we need to factor into our pricing,” Wabash CEO Brent Yeagy said on the company’s second-quarter conference call July 27. Price increases were included as 2023 orders began being accepted.
“We are experiencing strong 2023 demand discussions with our strategic customers, which has allowed us to open our 2023 orderbook to supplement their replacement cycles.”
FTR reported a total of 17,000 trailer orders for July. That suggest that preferred customer orders are being accepted while the rest of the fleets are on hold.
Strategic management of backlogs sets up a likely surge later in the year, said Charles Roth, FTR commercial vehicle analyst.
“Under these conditions, order volumes are likely to improve in Q4 as OEMs begin filling their production schedules for 2023,” Roth said. “While trucking conditions have as of late suffered due to weaker market dynamics and increasing costs, overall demand for new equipment remains exceptional.”
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