U.S. trailer net orders for August increased 17% month-over-month to 6,661 but were down 30% year-over-year, according to FTR Transportation Intelligence. Although there was a rise, orders remain well below seasonal expectations, averaging only 5,700 units per month over the last four months. Despite the month-over-month increase, August 2024’s net order total marked the fifth-lowest in the past four years. For the fourth straight month, cancellations accounted for more than 40% of total gross orders.
ACT Research reported that preliminary net trailer orders rose about 500 units from July to August. Though at 7,700 units, it was down 40% compared to last August.
[RELATED: Despite 26% monthly gain, July’s trailer orders were fourth lowest in four years]
“This month’s data brings YTD 2024 U.S. trailer net orders to 89,400 units, a 27% contraction when compared to the first eight months of 2023,” said Jennifer McNealy, director CV market research and publications at ACT Research.
Despite the sequential order improvement, McNealy noted that the August data continues to reflect suppressed demand due to elevated order activity in the past few years, including ongoing weak fundamentals in the for-hire trucking market and already-filled dealer inventories.
FTR noted similar sentiments about the freight conditions in 2024 that continue to lower trailer demand. Total trailer build decreased by 3% from July and 39% from a year ago, reaching just 17,535 units. This output is 30% below that the average August build level over the past five years and the lowest monthly output since December 2020.
With net orders significantly trailing production, FTR reported that August saw backlogs decrease by 12,515 units, bringing the total to just over 87,000 units. The larger month-over-month decrease in backlogs compared to production caused the backlog-to-build ratio to drop to five months, its lowest point since July 2020 and nearly a full month below the pre-2020 historical average. The ratio suggests increasing pressure on manufacturers to continue reducing production.
Dan Moyer, senior analyst, commercial vehicles at FTR, said FTR believes that declining trailer demand during 2024 indicates that some fleets may be prioritizing spending on new power units over trailers, either due to lower profitability or shifting trade cycles.
“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,” Moyer said.
McNealy also pointed out that it's important to note that the industry is currently in the slowest months of the annual order cycle, so stronger orders weren't anticipated for August. The true indicator of demand, or lack thereof, will become clearer in the next few months as OEMs start to open their 2025 books.
While ACT Research expects fleets to begin improving their earnings later this year, enhancing their capacity to invest in equipment, McNealy said recovery comes from a low base, as carrier profits in the first half of 2024 were at their lowest since early 2010.
Moyer added that similar to the Class 8 market with order boards opening in September, 2025, order levels will likely influence the scale and duration of future production cuts.
McNealy shared similar observations, noting that in 2025, the trailer industry is also “pressured by Class 8-impacting regulations.” This might indicate that fleets are more likely to prioritize spending on new power units ahead of the EPA’s 2027 regulatory changes.
Industry anecdotes suggest that the ‘pause button’ on demand will likely stay in place for the rest of 2024, with concerns extending to 2025 as well. The timing and size of 2025 order bookings is a ‘wildcard,’ according to ACT. Additional signs of concern include still-elevated cancellations and backlogs at their lowest since late 2013, and weak carrier profitability continues to limit support for trailer orders and backlog growth into the end of 2024.
