Trailer orders positive, but off pre-buy pace of trucks: Analyst

NEW YORK — Trailer orders were better than expected this January, despite lagging behind class-8 tractor sales, according to Bear Stearns, a leading global investment banking, securities trading and brokerage firm in the U.S.

Demand is firm, but trailer OEs challenge is earnings

While the news is a positive signal for underlying trailer demand, the firm says total trailer orders were up 4.0 percent from last year’s monthly mark compared to class 8, which is up 35.0 percent. Still, the 34,138 sold in North America are slightly higher than the 29k to 31k the firm projected.

Orders were sequentially up 9.1 percent from 31,294 in December. Timing of tire surcharges might have benefited January orders.

Year-over-year, dry van net new orders were up 8.1 percent in January (down 24.1 percent in December and down 18.7 percent in November into tough year-ago comps).

“While we believe the data supports the argument that underlying trailer demand remains firm, our sense is that Class 8 orders will continue to outpace trailer orders through the April-May timeframe,” the company states.

“Also, it’s possible that some of the strength in January’s dry van orders may represent a modest pull-forward ahead of Wabash’s tire surcharge, which took effect on February 1.”

Trailer cancellation rates remain at healthy levels, Bear Stearns adds. Total trailer cancellation rates modestly declined to 2.7 percent in January.

“In our view,” says the firm, “demand really hasn’t been the issue — converting the demand to earnings has been WNC’s primary challenge. But all considered, our initial look at the January data doesn’t change our near-term view dramatically either way.”