Trailer orders fell 28% in July compared to June, pushing the equipment replacement calendar into 2023 as most manufacturers did not stop bookings.

Fleets are awaiting placement of these orders. But most OEMs are unable to determine the exact price of new equipment. Inflation and volatile prices for key commodities such as steel and aluminum are hampering these efforts.

Tighter credit, softening customer sentiment and ongoing supply chain disruptions are headwinds for the industry. But orders for the past 12 months totaled 275,000 units, according to FTR Transportation Intelligence.

In the end, manufacturers will have to take a decisive step. If they do, the pent-up demand for new equipment will lead to a surge in demand. Manufacturers like Wabash provide price protection. They want the fleet to cover rising costs, such as premium shipping of parts needed to complete an assembly.

Pricing in conditions of rising inflation

“We still have additional inflation that we have to factor into our pricing,” Wabash CEO Brent Yeagy said during the company’s second quarter conference call on July 27. The price increase was included when orders for 2023 began to be accepted.

“We are experiencing strong 2023 demand discussions with our strategic customers, which has allowed us to open our 2023 order book to complement their replacement cycles.”

FTR reported a total of 17,000 trailer orders for July. This indicates that orders from preferred customers are accepted and the rest of the fleet is suspended.

Charles Roth, FTR’s commercial vehicle analyst, said strategic backlog management could lead to a spike later in the year.

“Under these conditions, order volumes are likely to improve in Q4 as OEMs begin to meet their 2023 production schedules,” Roth said. “While trucking conditions have deteriorated recently due to weaker market dynamics and rising costs, overall demand for new equipment remains exceptional.”

Trailer orders fall in June despite pent-up demand

Trailer manufacturers are holding back on new orders

Wabash pulls ahead despite signs of cooling economy

Click to see other FreightWaves articles by Alan Adler.

https://www.freightwaves.com/news/trailer-replacement-cycle-stretched-further-as-july-orders-drop

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