Market Report: US

From the September 2020 issue.

While Covid-19 has impacted the US economy – where the consequences are far reaching and herald an unprecedented series of challenges for North America – trailer manufacturers, component suppliers and the trucking industry at large are working overtime to ensure growth in 2021.

Data analysis firm, ACT Research, is optimistic about the state of North America’s trailer manufacturing industry.

June net US trailer orders of 13,441 units were, according to ACT Research’s latest trailer report, a significant improvement (333 per cent) from May’s very low comparison, arriving dramatically above June 2019’s level, up 112 per cent. Before accounting for cancellations, new orders of 16,000 units were up 117 per cent versus May and 41 per cent better year-over-year.

“It is important to remember that those comparisons are to exceedingly low orders during the first part of this quarter, when widespread Covid lockdowns were in place,” said ACT Research Director–CV Transportation Analysis and Research, Frank Maly.

“That said, the improved sequential comparisons do indicate some fleets, after assessing current market conditions, are beginning to cautiously commit to capital expenditures.

“Discussions indicated that large fleet orders helped drive June results, meaning improvement is generally not spread evenly across all OEMs, and we expect that choppiness to continue as we move through the summer.

“OEMs continue to seek order/build equilibrium, and while some fleets are willing to make investment commitments, most continue to remain on the sidelines, despite some negotiations occurring to help generate order volume.”

North American OEM, JOST International, established a training and troubleshooting platform earlier this year to support its customers amid Covid-19. The company specialises in landing gear and fifth wheel product lines from its head office in Grand Haven, Michigan. Brian Moynihan of JOST International confirmed that overall demand for trailers remains very soft. “Right now, most fleets are taking a ‘wait and see’ position as they determine demand for new equipment. “Right now, trailer orders are off by 50 per cent.  Many trailer OEMs closed operations at the beginning of the pandemic. Several were closed for multiple weeks. We still are seeing some major OEMs closing for periods of time. This is mainly to building and protecting their backlogs. In recent weeks the quote activity has been strong.  Many of the large truck load carriers that were standing on the side lines are now starting to send out RFQs for new trailers for late 2020 and into 2021.”

Moynihan said the new studio is key to its capability to adapt during pandemic conditions. “At JOST International we are finding new ways to reach out to our customers such as the JOST studio that we set up. This studio allows us to have one-on-one, face-to-face meetings with our customers. This has proven to be a very useful tool for new product introduction, training and troubleshooting.”

Early in the pandemic, according to Moynihan, there was a rush on orders from certain carriers that service the food distribution industry. “These would be typical grocery chain fleets,” he said. “There have also been strong orders from fleets that are involved in final mile delivers due to the unprecedented demand for home deliveries. This would include fleets like Amazon, UPS and FedEx Ground.”

Looking back at the US’ economic situation and how it directly affects the trucking industry, Moynihan expends trailer demand to remain soft until the States start top open the economies again or keep then open. “As we sit here in early July and see the reported Covid-19 cases increasing this will not help the demand for transportation equipment as States are slowing their re-opening or even backing up,” he said – adding that demand for service parts has stayed relatively strong through the pandemic. “Many fleets are starting to repair equipment that they already have on-hand versus buying new equipment. This has been a typical process in previous market down turns. We believe that this will continue to balance of 2020.”

Meanwhile, Wabash National has been focused on its zero emission and composite reefer solutions. At the beginning of the year the OEM presented at the Technology & Maintenance Council Annual Meeting & Transportation Technology Exhibition – North America’s premier technical conference for the truck and trailer sector. Its standout trailer design was the MSC (moulded structural composite) reefer which provides a unique platform for electric powered trailer refrigeration units and set new standards in efficiency and thermal performance. The OEM also re-introduced its lightweight Transcraft Eagle flatbed to the market.

Kevin Page, Wabash National SVP – Customer Value Creation, explained that in more recent times the business has taken its position as an essential supplier and service provider seriously to help its customers to continue running.

“We’ve had to strike a balance between maintaining the health and safety of our workforce and meeting customers’ needs,” he said. “To do that, we implemented physical and administrative controls to reduce the risk of spread within our operating and office environments. At first this was an adjustment for everyone, but we were able to return to typical productivity levels fairly quickly even with physical distancing on the production line.”
Page also commented on the US trailer market, stating the importance of the economy to its customers has really been highlighted over the past couple of months with their ability to keep critical goods moving.

“They have continued to operate through these challenging times, and I know they have a healthy appreciation for how quickly conditions can change in their market,” he said. “They’ve had to navigate fluctuations of being extremely busy when consumers cleared the shelves prior to state-mandated stay-at-home orders, to experiencing a considerable market softening with business closures, and now preparing for increased volumes as states reopen their economies. Although there is a good deal of uncertainty around what the ramp in freight activity will look like, Wabash National is flexible and prepared to execute in any type of market that materializes. We understand our customers are managing capital expenditures closely at the moment; however, we believe they still want to maintain average equipment ages at reasonable levels to ensure operating efficiency and attract driver talent.”
A major focus for equipment specialist, SAF-Holland, has been on its manufacturing according to Director of National Account Sales – USA, Doug Dorn. He said the addition of a new VP of Quality, Keith Belevender, who joined the executive staff in March, is key to the company’s strategy of strengthening existing quality assurance processes as well as implementing new ones across all of SAF-Holland’s North American manufacturing plants.
Dorn said the company’s response to Covid-19 includes varying expenses as much as possible, reduced staffing, virtual selling, increased use of web-based training and virtual training events.”The US trailer market is down 50 per cent with vans, reefers and intermodal being hit the hardest,” he said. “Vocational market – agriculture, flat and tank are all down, too, but much less (around 20 per cent). Our product mix remains roughly the same even though sales are down 40 per cent. All OEMS reduced production rates and it has affected our core products evenly.”

Manufacturing in the US, according to Dorn, stabilised in June but a much lower volume. “There are slight signs of increase in July, so we hope to continue to see a slight recovery through the year end 2020 and a nice growth in 2021,” he said.

Intermodal chassis specialist, CIE Manufacturing (CIEM), as of July 2020, implemented full production capabilities at its South Gate, CA, and Emporia, VA, facilities which was followed by intensive, specialised training for its production-based employees. Executive VP, Trevor Ash, said the team has started production on a new North American chassis line, the Pioneer.

“Beginning with 40’ and 40/45’ models exclusively, we will soon begin expanding that production to other models with the full expectation that North American demand for any model of intermodal chassis can be met from production in those two locations,” he said. “With this expansion into production, we recognise the needs of chassis customers that require higher volumes of chassis, with faster lead times and lower transport costs – important needs that no other North American manufacturer can meet. CIEM is also proud to be providing higher quality production jobs to both regions and increased US economic activity.”

CIEM, according to Ash is a provider of intermodal equipment to the transportation industry, an industry that is essential to the infrastructure of the US and North America as a whole. Just as importantly, the business has a duty to provide its employees with a safe and healthy environment.

“It is just as essential that our employees are able to continue to work and take care of their families,” Ash said. “Since the beginning of the Covid-19 pandemic we have integrated temperature checks and face masks into our daily routines, and in all gathering areas have painted 6’ apart spots on the floor so that social distancing is maintained at all times. It has always been our goal to protect our employees while also providing the essential services and equipment that will continue to keep America moving. To that end, not only did we not shut our doors during the pandemic, but we doubled down and transformed our facilities to manufacturing so that we can offer our customers peace of mind that we will be here to support and grow with them no matter the geopolitical, economic or health environment.”

As for the US trailer market, Ash agreed that 2020 continues to face unprecedented challenges. “Intermodal volumes and demand in Q1 and Q2 2020 as anticipated were grim, and although the market as a whole saw positive post-Labor Day activity, the ongoing spikes of Covid-19 continue to drive market uncertainty. Equipment and service providers in intermodal and trucking are still proceeding with a tone of cautiousness when it comes to replacing or adding to their ageing trailer fleets.”

Ash said a positive outcome during these turbulent times has been the creative and efficient business solutions that have eventuated out of necessity. “CIEM is proud to lead the intermodal industry with a continuing evolution in the quality and functionality of essential intermodal equipment, first with Revere, the container chassis with the highest ROI available, and now the Pioneer chassis line, globally sourced and North American made, with faster lead times,” he said. “As demand returns, CIEM will be the best positioned to fulfil these orders.”
As the economy continues to attempt a rebound, CIEM is starting to see the return of demand for all its key models – marine chassis 40’ and 40/45’, its domestic 53’ and multi-size 20/40’ combinations.

“We are also seeing an increase in demand for a more specialised chassis/customer approach and for this reason we will be offering each of our North American Pioneer chassis models in three different warranty specifications – five-year, seven-year and the 10-year for the customer who understands true cost of ownership over the life of the chassis,” Ash said. “By better meeting the ever-changing needs and demands of our customers, we can continue to drive the evolution of the intermodal industry.”

Of all the uncertainties facing the US economy at the present time, the resilience of the trucking industry, its drivers and its supporters remains unwavering according to Ash. “We are currently seeing sustained volume growth, but truck capacity remains tight,” he said. “It is for this reason that as we look at the current state of freight and trucking, we believe that to maximise efficiencies and meet an impending return of demand there is a place for both intermodal and trucking to play a role. Together we can look forward to a marked period of recovery for the remainder of 2020 and into 2021.”

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