After a strong second quarter, momentum in trailer shipments paused in the third quarter, according to Peter Toja, president of Economic Planning Associates (EPA Inc).
Trailer manufacturers shipped an estimated 58,200 complete trailers during the third quarter, 8.1% lower than the prior three-month period. However, last quarter’s shipments finished 1.5% above those of the third quarter of 2004.
The slowdown was centered in the van segment where shipments of 42,500 units were 9.6% below the strong level of the second quarter and 2.7% below the third quarter of last year. By contrast, non-van shipments were still 15.2% higher than the year ago level.
In the van segment, shipments of dry freight, insulated, and “all other” equipment all registered modest year-over-year declines. However, shipments of all the other major equipment categories (platforms, dumps, low beds, and bulk) all had double-digit increases above their year-earlier levels. The only exception was the “all other” category, which recorded a 6.7% decline from the previous year.
Through the first nine months of 2005, manufactures were topping last year’s pace by 8.8%.
Looking ahead, Toja said it is still too early to fully gauge the economic impact of the hurricanes and storms that struck the U S in recent months, he is sure some investment plans were put on hold as corporate managers assessed their individual situations.
“While we expect only modest gains in the fourth quarter, we remain optimistic with regard to trailer demand in 2006 and thereafter,” Toja said. “The reconstruction of certain areas of the Gulf Coast as well as a rejuvenation in merchandise trade (both exports and imports) as port facilities become fully operational will help boost demand for manufactured products and transportation equipment beyond the continued growth of consumer spending and business investment.
“We remain concerned with regard to the continued efforts by the Federal Reserve to contain inflationary pressures by raising interest rates. While we have not yet felt any significant economic slowing because of rates, it is only a matter of time before higher rates impact consumer credit card rates, mortgage rates, and financial costs to businesses. At the same time, we are somewhat heartened by the recent easing in oil prices and hope that this will lead to a lessened fear of inflation and a softer Fed approach to interest rates in the coming months.
• Modest gains in factory output in the next few months. Momentum may slow in the fourth quarter, but he expects faster quarterly gains in 2006.
• Consumer spending will remain on track.
• A weaker dollar value and some improvements in the economic activities of major trading partners will lift exports.
• Capital goods will continue expanding. The growth will promote further gains in factory output and increased demand for vans and containers.
• The construction markets are strong, and spending is expected to increase in all major categories—private residential, commercial, industrial, and public. Continued high levels of activities during the next year will support demand for a variety of trailers such as dumps, flats, and low beds.
EPA Inc will provide clients with complete details of its findings (including individual types of trailers and intermodal equipment), along with short- and long-term forecasts of customer market activities in the November edition of its quarterly Truck and Trailer Report.