It’s good to be in the trailer business right now. ACT Research said the third quarter of 2018 posted the strongest monthly net order volume ever with more than 58,000 in September alone.
Several factors are contributing to the high demand, as Frank Maly, director of commercial vehicle transportation analysis and research for Act, points out, citing strong freight demand, tight capacity, and rising contract and spot market rates.
Truck News spoke with a few trailer manufacturers and dealers to get their thoughts on what is driving the hot trailer market, what’s in highest demand, and how tariffs and other factors are affecting pricing.
Heating up the market
Mack Keay is the branch manager for Ocean Trailer’s Winnipeg location, and he said it’s difficult to pinpoint any single reason why the trailer market is doing so well.
“We are seeing a lot of new businesses entering the industry, much more than normal,” said Keay. “They all want new equipment starting out. That is a big reason for increased sales at our dealership.”
On the other hand, Keay is not seeing his long-term customers looking to replace their old equipment.
“If companies were replacing old equipment, we would be seeing lots of trade-ins, and we just aren’t seeing that,” he said. “There is very little for late model used trailers in the market. So, the state of freight is encouraging companies to add to their fleets rather than just update them.”
Tank trailer manufacturer Tremcar has benefited from robust demand south of the border.
Melanie Dufresne, president’s assistant, marketing and communications for Tremcar, said petrochemical and construction sectors have been particularly strong, and with oil prices on the rise, demand for pneumatics, crude oil, and other tank trailers related to the industry has increased.
To keep up with demand, Tremcar has invested in a school within its head plant to teach the welding trade applied to company credentials. Tremcar also expanded its stainless steel plant in St.-Jean-sur-Richelieu, Que., to increase its production lines. But Dufresne is not seeing this trend in Canada, where she said demand has not spiked as much as it has in the U.S.
“The economy has slowly picked up, but nothing as important as before 2014,” she said. “Out west, we do not have the infrastructure to compete with our American neighbors in terms of crude oil distribution. Oil transportation is costly. The only way we could recreate that economic boom is if we had pipelines distributing the crude oil to refineries out east and more.”
Great Dane Trailers is seeing today’s high demand create some of the longest backlogs in its history.
“Many factors are contributing to this hot market: freight demand, end user profitability, electronic logging device (ELD) enforcement, driver shortages, the growth of e-commerce, and telematics,” said Dave Gilliland, Great Dane’s vice-president of national accounts. “Backlogs today are among the longest in history. Great Dane is supporting those who need quicker deliveries with our robust stock trailer and truck body program at all of our branch and dealer locations.”
Jeff Weber, director of used trailer sales for Great Dane, added his company leverages its network to support its used trailer program.
“In a market that’s as strong as it is today, where build lead times are already out through the end of the year, customers need something today they can put freight in,” said Weber. “Plus, the buying cycle is much shorter than in years past. Our used trailer program helps our customers expand or shrink their trailer fleet to meet their business demands.”
For Ocean Trailer, reefers are the cream of the crop right now, and spec’s that were once thought of as a luxury have become standard.
“In the last few years, spec’s like aluminum wheels and tire inflation systems have become the norm on most trailer orders,” said Keay, “and we have started to include that on all the stock trailers we order.”
Great Dane custom designs most of its trailers for each customer, and some trends are becoming more in-demand.
“I would say that telematics, antimicrobial liners on reefers…and robust stock programs with a variety of offerings will be big trends in 2019,” said Gilliland.
In the tanker market, Dufresne is seeing high demand for stainless steel DOT/TC 407 trailers, as well as aluminum pneumatics for the transportation of flour, powdered cement, and plastic pellets.
The quality of today’s trailers has improved and they are lasting longer than ever. As Gilliland points out, there are several contributing factors for this, both from a manufacturing standpoint and from the customer’s.
“Components are longer-lasting, the manufacturing process is improved, corrosion-resistant materials are being used today,” he said. “The most important part of long life, though, is to spec’ the trailer or truck body to the operation it is running in.”
Keay said customers will get what they pay for when it comes to how long they expect their trailer to last.
“A good trailer is not cheap and a cheap trailer is not good,” said Keay. “You get what you pay for.”
Echoing Gilliland’s sentiment, Keay said a trailer’s specs will impact its longevity.
“Spec’ing a van or reefer with extra heavy-duty side rails, extra door hinges, and lock rods will greatly increase your equipment life and reduce maintenance costs over the life of the trailer,” he said, adding that undercoating is becoming more common on trailers, which also extends their lifespan. But the type of coating does make a difference.
“Utility is standard with a coating called Scharpf. It is a wax-based coating that is sprayed on the underside of the trailer and can be cleaned off when work, like welding, is needed,” Keay explained. “The other coating is Galvanization. Lots of OEMs use this, and in my opinion it is less desirable than the alternatives. It does prevent corrosion, but the chemical solution used is harmful to the environment, and when it is welded on, toxic gasses are given off.”
Though Dufresne says Tremcar trailers last too long, according to her boss, there are ways customers can get the most out of their tanker trailer.
“The secret to longevity is to be attentive to the product spec’s you are carrying and act upon that,” she said. “Some products are very corrosive. Cleaning the tank regularly and refreshing the lining in certain cases optimizes its lifespan.”
Despite tariffs on steel and aluminum and high demand driving up the price of today’s trailers, customers continue to open their pocketbooks.
“Tariffs, along with high demand and shortages of labor in our industry are a fact, and have increased the cost of equipment,” said Gilliland. “Customers understand this and are ordering equipment. Customers don’t want to be left out, so order intake remains very strong.”
Dufresne said Tremcar’s stainless steel products have been affected by U.S.-imposed tariffs over the past year.
“The Trump government added a 25% tariff on the raw product as it crosses to the U.S. to transformation plants before it is imported back to Canada as a semi-finished product,” Dufresne said. “This evidently created an increase in price that the end user pays for. All tank manufacturers are affected by this increase.”
Tremcar is also impacted by the 10% tax on aluminum going into the U.S., and another 10% on the semi-finished product coming back to Canada, putting the company at a disadvantage with its American competitors.
Keay added that customers looking to purchase a new reefer or dry van trailer will pay between $2,000 and $4,000 more than a year ago.
“This is not only due to tariffs,” he said. “Part of it is just supply and demand. We’re selling more and more and that means OEMs and component manufacturers can ask more money for their products.”
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