Preliminary trailer orders for June are at 5,500 units, down 53 percent month over month and 70 percent year over year, with orders falling to the lowest level since September 2009, FTR reports. ACT Research’s preliminary estimate for June 2019 net trailer orders is 6,200 units.
FTR states incoming dry van orders were weak and cancellations high, as fleets adjust orders previously placed according to their second-half needs. Refrigerated vans followed a similar pattern and flatbed orders remained feeble. Van production stayed fairly stable at high rates, while there is continued softening in the flatbed market.
Sales are expected to moderate sometime in the second half of the year, as supply catches up with demand. Trailer orders for the past 12 months now total 343,000 units, according to FTR.
“Only a couple OEMs have started taking orders for 2020 and fleets did not respond much to this move in June,” says Don Ake, FTR vice president, commercial vehicles. “Carriers are reluctant to order at this time since commodity and component prices are uncertain due to the tariffs. It would appear that the market is returning to normal ordering cycles, with fleets evaluating their next year requirements during the summer and then starting to place those orders around October.
ACT says that despite the disappointing order report, production continued at a brisk pace last month. Preliminary results indicate June will likely rank as the sixth best production month in history, with all of those top six occurring since last August. Backlogs commit the industry into mid-December at current build rates.
“Several aspects of June trailer orders were disappointing. Total new orders continued to slide, coming in below 12,000 units. However, that weakness was exacerbated by sustained strong cancellations. Once those are taken into account, preliminary net orders came in at 6,200 trailers, the lowest monthly volume since September of 2009. Seasonal adjustment provided little support, with volume edging just over 7,000 units after adjustment,” says Frank Maly, ACT director of commercial vehicle transportation analysis and research.
“Despite indications earlier this year that fleets were anxious to place orders for 2020, discussions now indicate that fleets may have shifted to an extremely conservative stance. Softer freight volumes combined with lower rates could well be generating a reassessment of 2020 investment plans,” Maly says. “Furthermore, cancellations continue to be strong, and that churn in the backlog is likely impacting this year’s fourth quarter. That’s an indication that this year may well close on a very weak note, setting a troublesome foundation for 2020.”