James Menzies: Welcome back to our next and final installment of the Five Minute Deep Dive: Five Minutes of What Matters Most, featuring FTR. I’m James Menzies. He’s Eric Starks. And today, we’re gonna talk about the trailer market.

Trailers aren’t just boxes on wheels. Their demand can also serve as a leading indicator, maybe even more so than Class 8 orders. Why is that, Eric? Why are trailers so important to watch if you’re looking for signs of a recovery?

Eric Starks: Well, part of it is that they are relatively inexpensive, compared to a heavy Class 8 truck. So they’re easier to purchase or make that call to do that. But I think more shockingly is you just said they’re not a box on wheels.

They are a box on wheels. And that’s the beauty of it — they are engineered in a way that you can keep the cost structure down and get a lot of utilization out of that piece of equipment. Ultimately, they are a very good indicator for what’s happening.

They are much more cyclical from an order environment. As we move to the latter part of the calendar year into November, December, they pick up dramatically. And then for several months, they stay up there, then they fall off. We’re at this point in time right now where it should be a weaker order period, and it is. Yet the big problem right now is the orders are weaker than we would normally anticipate.

I think that’s creating some issues. We were starting to see some stabilization earlier this year, and that has started to go away. We’ve had to pull our forecast for how much will get produced for trailers down noticeably.

And there’s definitely been disconnects between the types of equipment that are driving it.

Menzies: So what are you seeing for the trailer market for the rest of the year? Firstly, van and reefer. And you mentioned there are other segments that might be performing better than others. What are those?

Starks: Yeah. So, in general, in 2024, we were down nearly 27% already. We were coming into this market on a weak footing, and now we’re gonna be down another 20% for the balance of this year. It’s really not till next year that we start seeing some type of increase.

We’ll come back up about 15%-ish next year, but that doesn’t get you anywhere close to where you need to be. So, there’s definitely a lot of pressure on that. And when we start looking at the segmentation, there are different ways that we look at it.

The main ones out there are the dry van, refrigerated, and flatbed segments. These are the top three.

The dry van market has continued to struggle — no surprise there. The refrigerated market has held up better than what we have seen on the dry van side, up until this point, but we’re starting to see some additional weakness creeping back into that particular market.

We actually saw some life in the flatbed market as we moved through the early part of this year, and then that has started to ease back again. So there are really all of these different dynamics that are playing into it. One was we were seeing some metal and steel moving, specifically on the East Coast, that was helping that particular market, and I think that has started to dissipate again. So just a lot of moving parts in there.

Menzies: Earlier in the series, we talked about tariffs. We talked about Class 8 demand and the impact tariffs have on Class 8 prices. A lot of steel goes into a trailer too. What should fleets know about the potential cost increases that might be associated with tariffs when it comes to trailers?

Starks: Yeah. And it’s not just the steel too — it’s the aluminum. We get a lot of aluminum from up north with you guys, from Canada. And that’s a big problem with regards to how it moves through the pricing environment.

In a lot of ways, trailers are getting hit harder than some of the other equipment types because they have so much metal as part of them. We’re definitely seeing a lot of pricing pressure there. What’s been really fascinating — and “fascinating” is kind of a relative term here — is that if an order is coming in, they really don’t know what the price is. You’re basically placing an order for something that may cost you significantly higher in the future. You don’t actually start to lock down that price in a lot of ways until you get closer to that delivery date.

With the expectation, I think people are hoping that those will start to ease by the time they want to take delivery of the equipment. But, clearly, a significant amount of pricing pressure is based upon the metal markets.

We have seen some shift from, say, China and from Canada into the U.S. market. But the problem we’re running into is there are some types of equipment that have to have different types of metal, and in a lot of cases, that just can’t be produced within the U.S. easily to make that a reality. You’re going to continue to have that pricing pressure in there until they can figure out how to move that back into the U.S. market. I just don’t know if that is very feasible in any type of timely situation.

Menzies: If you want to know more about the trailer market and to dive much deeper into it, where do you want to be from September 8 to 11?

Starks: Oh, you want to be in Indianapolis. You want to be hanging out with us at the FTR Transportation Conference, and we’ve got four packed days of speakers from the FTR folks to industry veterans and practitioners who are on the ground doing the work. I think this is going to be a great way for people to understand where the markets are going and how to start to set strategy for the next several years.

Menzies: Can’t wait for it.