Doing the math on trailer market capacity, growth potential

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Updated Oct 17, 2024
Jonathan Starks speaks at 2024 NTDA Convention
Jonathan Starks talks through trailer order data at the 2024 NTDA Convention in Indian Wells, Calif.

Recent arithmetic in the trailer market hasn’t been pretty, but FTR CEO Jonathan Starks says it makes sense.

Trailer build rates exploded in 2021 and into 2022 as manufacturers raced to fulfill a fully utilized, high-demand freight market. Then the market turned. Quickly. 

Industrial production, which was setting records across the world, swung on a dime, falling below historical averages as the global supply chain fractured. Goods purchase rates waned as consumers shifting their buying power toward services. By late 2022, the economy OEMs had committed their production plans to was gone. Freight rates tumbled as loads evaporated and carried pulled back investment.

By the middle of 2023, it was clear the trailer sector was oversupplied and a major correction was coming. Starks warned the market of the correction at last year’s National Trailer Dealers Association (NTDA) Convention.

[RELATED: Trailer OEMs: We’re weathering the storm together]

In a pair of sessions at this year’s event in Indian Wells, Calif., Starks tried to be more hopeful. In his keynote forecasting address, Starks admitted the trailer market is still in a business cycle trough. Production levels are down and are likely to remain that way for “the next three quarters,” but Starks believes the latter half of 2025 will welcome a return to rising demand and positive market forces. After more than a year of rightsizing, trailer inventories and backlogs are beginning to return to normal levels.

During his follow-up workshop session Thursday, Starks said 2025 won’t be a great year, but it will be a step forward.

“It should be a sizeable enough recovery that you should be able to feel it in your operations,” he said.

Dealers are definitely feeling the downswing of the market this year. Starks said FTR data indicates dry van orders are down 31% year to date through August. Flatbed orders also are off by 5%, though reefer orders have been positive, up 24%. For a market that produced 309,000 units in 2022 and 314,000 units in 2023, Starks said he knows falling to replacement demand — FTR is forecasting 228,000 trailers will be produced in 2024 — has felt like a crater.

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But because broad economic conditions are still strong and positive headwinds are appearing (the Fed rate cut, post-election investment climate, near shoring efforts across many industries), Starks said trailer dealers shouldn’t view the 2024’s poor conditions as similar to 2020, or 2008 and 2009. The market isn’t nearly as fragile; the arithmetic not nearly as hard.

“The market had to find more balance coming into this year,” he said. “Getting inventories a little more right sized will allow the market to reaccelerate growth [when demand returns].”

As such, FTR is forecasting trailer production levels of 253,000 units in 2025 and 290,000 in 2026.

“We’re getting close to where things turn around,” he said. 

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