A significant uptick in trailer cancellations for a second consecutive month has ACT Research suggesting the industry keep a close eye on the market.
It’s not all bad news, however, said Jennifer McNealy, Director of CV Market Research and Publications at ACT Research.
“While the broad-based nature of cancellations suggests the turn is starting to come into focus, this is juxtaposed against a backdrop of rather robust backlogs, even with declining orders,” she said in this month’s report.
“The seasonally adjusted backlog-to-build ration gained 120 basis points m/m, to 8.0 months in May. Seasonal adjustment takes dry van BL/BU to 7.4 months and reefers to 9.1, so despite the improvement in build, this essentially commits the industry through year-end 2023.”
The message McNealy is getting from trailer builders, is that customers are cutting back on their anticipated order appetite for this year and next, and that fewer customers are on the sidelines to pick up whatever build slots become available, adding that with two large jumps in cancellations, it is prudent to keep an eye on the market.
“Total cancels grew to 4.2 per cent of backlog, higher than April’s 2.8 per cent and significantly higher than March’s 0.9 per cent rate. That said, while several segments were at or below 1.5 per cent, dry vans rose to 4.1 per cent, reefers are now at 6.5 per cent and flatbeds hit 4.7 per cent.”
Earlier this month, May’s preliminary net trailer orders decreased and were lower against longer-term comparisons.
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