According to ACT Research, truck and trailer manufacturers are desperate to increase production rates, but are struggling to overcome a myriad of obstacles.
Truck and trailer construction is hampered by raw material and labor shortages that have dragged on since the United States began crawling toward a post-pandemic economic recovery.
“Material and component supplies, as well as personnel issues, continue to generate headwinds for US trailer OEMs,” said Frank Maly, CV Transportation Research and Analysis Director at ACT Research. There are indications that staffing problems may ease slightly, he added, and the upcoming end of additional unemployment benefits could further improve labor availability. “That said, the prices and availability of components and materials are driving up trailer prices and a build-up of red-tag units, with the volume of these units expected to continue to increase over the next several months.”
Malay said concerns about future availability and pricing are major factors in the reluctance of trailer OEMs to accept future orders, causing uncertainty as to when the 2022 orders will “officially” open. ” In turn, significant pent-up demand is occurring due to the reluctance to take orders for dry vans and refrigerated trucks at this time, with the industry’s average backlog to build ratio stretching to the end. from the first quarter of 22, to June 2021. build rates, “he said.” How to coordinate the timing of this opening by OEMs is a second major issue. While order volumes have remained low, it does no doubt negotiations have continued.Once orders are accepted again, expect a flood that could consume a significant portion of pro slots. duction remaining in 2022. “
“The unknown,” Maly said, “is how quickly OEMs will be able to ramp up production, which will have a corresponding impact on their pace of order acceptance. “We already have order books that extend on average to Q2’22,” he said. “For reference, remember the increase in orders that occurred at the end of 2018, which immediately pushed back commitments until the third quarter of next year. A similar trend could well emerge. major impact on this order rate.
US net trailer orders of 8,128 units in July fell nearly 26% from the previous month, according to ACT, and were nearly 58% lower from July 2020. Before accounting for cancellations, new orders of 9,500 units were down more than 27% from June. , and 53% less than in the previous July.
Truck built in the same boat as the trailers
The truck industry is not doing any better and is facing similar headwinds despite strong demand.
“Historically, large orders from the fourth quarter, the accumulation of large order books and increasing delivery times [called BL/BU ratios] are a recipe for sharply rising production at this point in an industry bull cycle, ”said Kenny Vieth, president of research and senior analyst at ACT. “There are growing pains at the start of each cycle as the supply chain moves unevenly toward higher build rates, but this cycle of pandemic recovery has been beset by extraordinary global issues that have magnified the challenges. traditional ramp-up of steel supplies to national semiconductor staff.
ACT pointed out that there has been no noticeable change in the trajectory of macro data points that influence demand for commercial vehicles. With the exception of the COVID Delta variant asterisk, economic strength is broad and concentrated in economic activity related to goods. However, Class 8 construction rates fell in July.
“The Class 8 market saw manufacturing rates take a big step backwards in July, as OEMs took days and weeks to make up for shortages of components, especially semiconductors,” Vieth said. “During the month, Class 8 production fell to 15 months. low, as construction per available day fell significantly below trend. “
Class 5-7 truck builds also slipped in July, but Vieth said this was more in line with expectations. As with Class 8, the drop in average tariffs was also the smallest since the release linked to the COVID shutdown in May 2020. “Additionally, we have heard / read that OEMs of heavy equipment were removing semiconductors from their medium-duty products to maximize chip value, ”he added. “Some big players in the MD space are doing the same thing, using chips that would have been intended for cars and vans to keep Class 5-7 out.”