Demand for trailers remains strong overall despite a predicted seasonal dip, but full order boards and economic troubles, including a possible recession, are dampening supply, according to industry research group ACT Research.
July net trailer orders in the U.S. were just under 17,000, 33% lower than June, but more than 103% over the July 2021 number. Order boards that opened in June were quickly filled, leaving few slots for July.
“OEMs continue to negotiate with fleets, but with some 2023 order boards opened in June, those efforts quickly moved to booked business, leaving a tougher month to which July orders were compared,” said Jennifer McNealy, ACT’s director of commercial vehicle market research and publications. “Until order boards are opened deeper into next year, we expect orders and production to travel in lockstep. That said, demand remains strong, despite increased pricing, and cancellations, although ticking upward, are insignificant.”
Eric Crawford, the research group’s VP and senior analyst, said ACT has increased its number of raise their predicted number of manufactured trailers, but the organization has reduced its forecasts for the number of trailers that will be produced in 2023 and 2024 because of interest rates and a possible recession—which is now ACT’s base-case scenario
“Difficulty in projecting part and material prices has made it difficult for manufacturers to set firm prices for trailers currently on order,” Crawford said, and that build plan projections “have changed significantly over the past three months.”
ACT Research’s base case is a “modest” recession in 2023, centered on the year’s first quarter. Crawford said that material freight downturn had already started in the second quarter of 2022 and is beginning to contract compared to last year. He did say that, in the past few months, manufacturers have seen “modest-to-healthy” build plans in aggregate, and that overall, “we believe this suggests conditions are improving.”
On inflation, Crawford said, “We believe the Fed is likely to remain aggressive, but there is hope inflation will moderate enough to accommodate a neutral stance sooner, and we may be able to avoid a deeper recession in 2023.”
Flat used truck prices a 'twist'
Used Class 8 truck sales fell 8% since July and were 47% lower compared to July 2021. However, used price trucks were the same as in June (and 41% higher than in July 2021). Steve Tam, vice president at ACT, had expected truck prices to decline, and he called steady prices a “twist.”
“Given softer spot freight volumes and rates, coupled with still-expensive diesel fuel prices, the logical expectation was for continued declines in values,” Tam said. He explained the flat pricing by saying that “a higher number of higher-dollar transactions resulted in improved overall results during the month” and that, on average, “the units were about five months younger, even if they have a few more miles on them.”
The average miles of sold trucks was 1% than and June, and the average age was 5% younger.