Trucking: ACT reports gains in trailer net orders and mixed results for used truck volumes

Data from ACT Research, a provider of data and analysis for trucks and other commercial vehicles, released this week found that net orders for commercial trailers were up nearly 40 percent in 2011 compared to 2010, while used truck volumes in December were up compared to November but down annually.

ACT said net trailers were up 38 percent in 2011, increasing from 170,500 in 2010 to 235,300 in 2011, which ACT president and senior analyst reflects a large build up in orders towards the end of 2010 and set the stage for the ramp-up in production in 2011

Trailer build—or trailer manufacturing—saw a 69 percent gain. In 2010, truck manufacturers built roughly 125,900 trailers, which was followed up by 212,900 trailers built in 2011.

“We had a nice run-up in backlogs in 2010, with orders being placed that go into backlog and then get built,” explained Vieth. “Given that there were more orders than build again in 2011, which means trailer industry backlogs ended 2011 at an even higher level than they did in 2010. This suggests the high level of orders to backlogs and a low level of cancellations are good signs for continued trailer demand in 2012.”

Truckers continuing to have pricing power is a major driver for the increase in trailer demand, noted Vieth, as they have more of a say in freight rate negotiations than they did as recently as 2009, when there was a high level of excess capacity.

And truckers are more profitable now than they were then and can better afford to purchase new equipment, too, coupled with trailer prices having gone up significantly over the past 18 months that has helped facilitate market activity, noted Vieth.

“We went through a very bad patch from 2007 through the first half of 2010, when trailer demand was extremely weak,” said Vieth. “Our analysis suggests that on top of freight growth and trucker profits, used equipment valuations are a fairly good component of pent-up demand in the equation as well.”

December used truck volumes: For Class 8 trucks, December’s used truck tally for trucks in the auction, retail, and wholesale sales market channels came in at 1,874 as reported being sold, said Steve Tam, ACT vice president-commercial sector. This was up 13 compared to November’s 1,665.

But 2011 number compared to 2010 was down about 9 percent.

“The story all along has been that we have not had the inventory,” said Tam. “That is the biggest issue; we can’t sell it if we don’t have it. As things start to break loose on the new trucks side and people start to purchase and not increase the size of their fleet but actually trade in some trucks, we are starting to see more people get their hands on the used truck inventory. We are going to be in this predicament for a while, as new trucks were sold at below replacement levels for all of 2007-2010 and will put pressure on the used side for a few years.”

Tam said that it is likely that for all of 2012 the industry will be “hard-pressed” to get sufficient inventory levels and it could continue into 2013. And he said the average price for used trucks for all sales levels was about $39,100, whereas that same number in 2010 was about $31,200, a 25 percent annual price increase. And a year ago from now, he said it is possible that price could see a ten percent gain, with prices up but not at the same rate, due to harder comparisons, coupled with inventory coming in from the new truck side which will alleviate some of that pricing pressure.