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ACT: March Trailer Industry Preliminary Net Order Volume Down 48% Y/Y

April 15, 2019, 07:05 AM
Filed Under: Trucking

ACT Research’s preliminary estimate for March 2019 net trailer orders is 15,600 units. Final volume will be available later this month.

“It appears that the industry entered a bit of a holding pattern in March, as order volume declined significantly from both the previous month and this time last year. Net orders dropped 35 percent from February and were approximately 48 percent below a year ago,” said Frank Maly, ACT’s Director of CV Transportation Analysis and Research.

Maly added, “Although current backlogs consume the majority of available build slots this year, particularly in the dry van and reefer segments, we continue to hear that OEMs are reluctant to fully open the 2020 orderboards. Their concerns center around materials and component pricing, which would obviously have measurable impact on future pricing. While some fleets appear to be willing to extend commitments, others might be waiting, monitoring current market conditions. Also worth noting, given extended backlogs, OEMs are pushing to deliver trailers as quickly as possible; preliminary information indicates production crossed the 30k unit mark last month for only the second time in industry history.”

Equipment Supply-Freight Demand Imbalance, Freight Rate Recession

According to ACT Research’s latest release of the North American Commercial Vehicle OUTLOOK, a freight recession is not out of the question, but the easier call is a rate recession as truck supply-freight demand fall out of balance.

“While there is a very low probability and no expectation of an economywide recession in 2019, freight-related data points have been sufficiently bad in breadth and duration to note that a freight recession is possible,” said Kenny Vieth, ACT’s President and Senior Analyst. “That said, slower freight growth, an easing of driver supply constraints, the resumption of the long-run freight productivity trend and strong Class 8 tractor fleet growth will increasingly pressure contract rates and by extension, trucker profitability in 2019.”

Regarding heavy vehicle demand, Vieth noted, “The rolling-over of ACT’s Dashboard guidance at the end of 2018 suggests today’s order weakness will transition from ‘too much backlog’ to an equipment supply-freight demand imbalance in the near future.”

Despite Vieth’s cautious tenor, he noted that the heavy commercial vehicle market continues to benefit from a still-broad spectrum of supply and demand-side triggers, including a freight rate markdown that is from record highs, desirable new technologies, better fuel economy and for trailers increased demand for drop-and-hook to keep drivers moving.

“Preliminary March net orders, at 20k, were the lowest on both a nominal and seasonally adjusted basis since July 2018. Below trend demand reduced upward pressure on the forecast that has been in evidence since the first half of 2018,” he said.

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