Trailer orders picked up in August but remain well below 2023 totals and seasonal expectations, FTR reported Thursday.
The company says U.S. trailer orders last month totaled 6,661 units, up 17% from July but down 30% year over year. Orders have been well below seasonal expectations at just 5,700 units per month the last four months. The company adds even with August's net order total increase, the month was the fifth lowest in the past four years.
“FTR believes that weakening trailer demand during 2024 to date indicates that in the near term some fleets are likely prioritizing capital expenditures on new power units over investments in new trailer equipment, whether due to reduced profitability or shifting trade cycles,” says Dan Moyer, FTR senior analyst, commercial vehicles.
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FTR says cancellations as a percentage of total gross orders remained above 30% for the fourth consecutive month in August, while total trailer build was down 3% from July and 39% below a year ago, totaling just 17,535 units. The company says this figure is 30% lower than the average August build level over the past five years and the lowest monthly output since December 2020.
As such, with net orders continuing to lag production substantially, backlogs in August dropped by 12,515 units, ending just above 87,000 units. FTR says the larger month over month decrease in backlogs compared to production resulted in the backlog/build ratio decreasing to 5.0 months — the lowest since July 2020 and nearly a month below the historical average prior to 2020. The current ratio indicates that there is a steadily growing incentive for manufacturers to continue slowing production, the company adds.
Moyer says September will be illuminating for what to expect in the immediate future.
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“Higher-than-ideal trailer inventories at dealers across most segments, reduced trailer capital expenditures at fleets, and declining backlogs likely will exert downward pressure on build rates for the rest of 2024. As with the Class 8 market, order boards opening during September mean that 2025 order levels likely will start to dictate the extent and duration of further potential production cuts,” he says.
