(Click to enlarge.)It was all treats and no tricks in October as U.S. trailer orders were the third highest in history, according to ACT Research. What’s more, FTR reports net trailer orders for the month set an all-time record.
ACT reports preliminary information for October indicates the U.S. trailer industry booked 54,200 net orders for the month, up 6 percent from September and more than 68 percent better than the same month last year. Before accounting for cancellations, new orders crossed the 56,000 mark. Both new and net orders ranked as the third-best in industry history.
FTR’s tally for the month was 56,500 units, up 9 percent month over month and up 68 percent year over year.
“September’s rank as third-best month in industry history was short-lived, as October activity now takes that title. Fleet commitments over the past two months have now pushed industry backlog to the highest level since June of last year. Increases in both freight volumes and rates, along with capacity challenges, have influenced fleets to aggressively enter the market,” said Frank Maly, ACT director of CV transportation analysis and research.
“Current production rates would result in industry backlogs extending into next July. Expect OEMs to adjust build rates upward to take advantage of this positive shift in fleet investment,” Maly says.
FTR reports fleets ordered dry refrigerated vans in large quantities, most for delivery in the second half of 2021. Flatbed orders improved and should reach their highest total this year. Backlogs are expected to rise to levels not seen since mid-2019.
The surge in consumer-based freight continues to strain capacity and boost freight rates. Healthy fleet profits are resulting in large trailer orders for replacement of older dry vans and reefers and also for expansion due to the chaotic freight environment, according to FTR.
Carriers are utilizing more drop-and-hook runs to compensate for the current driver shortage. Compounding the problem is a pronounced shortage of wood and aluminum components, which is limiting OEM van production. Fleets are concerned about these supply issues continuing, so many are placing all their requirements orders for 2021 now to lock up future OEM build slots, FTR states.
“This is a repeat of 2018 when fleets placed huge orders in September-October to reserve build slots in 2019. Then, it was because the hot demand was outstripping OEM and supplier capacity. Now, it’s because the pandemic has disrupted the supply chain and some essential components are having trouble making it through the pipeline fast enough. We would expect these bottlenecks to be resolved over the next few months, resulting in some of the large orders of the last two months being canceled or pushed out next summer as happened in 2019,” says Don Ake, FTR vice president of commercial vehicles.
“There are still significant risks due to the increase in positive COVID-19 tests. The industry powered right through the summer despite rising infections. There is strong positive momentum right now, but it remains to be seen if possible new health restrictions will slow down the growth of freight. This industry is known for wild demand swings and we’ve gone from record low orders to record high orders in just seven months,” Ake says.
