Eric Starks delivered some positive news for trailer manufacturers in his “Trailer Industry Update and Outlook”: things are good and getting better.

Starks, president of FTR Associates, said that trailer total capacity utilization is sitting at 90%, which suggests that only replacements are needed until later this year.

“But the industry needs to be starting to add equipment to make up for that,” he said. “The closer we get to the 95% to 100% level, the more equipment needs to be added into the marketplace. So this is a positive thing for trailer manufacturers over the next several quarters. There will be pent-up demand as there’s pressure because of the availability of equipment.”

He said that recent trailers orders are down year-over-year, but he said the numbers are “fairly flat,” so it doesn’t suggest things are heating up or slowing down.

“That’s the best thing you can hope for—a flat environment at a decent level,” he said. “This suggests availability in the short term won’t be huge. Trailer production has been up a decent amount the last few months.

“Our view of this market has not changed noticeably. It’s where we could see some upside opportunity in the second half, but orders will dictate that, and that means orders have to start coming in at a time they don’t traditionally come in. As we get into the May-June-July time frame, orders will have to be at levels we don’t normally see. Once Hours-of-Service (HOS) rules come into play, it’s hard to ramp up and get more equipment into the marketplace quickly.”

Starks said that North American Class 8 truck orders edged higher in December, are up 10% year-over-year, and are expected to remain healthy through the summer. He added that truck utilization is expected to spike in the second half of the year. It’s been sitting in the 95% range, and has been starting to ease up recently.

“We don’t expect it to get to critical levels until later this year,” he said. “The closer you start to get to the 100% level, the easier it is to pass along rate increases. It’s been difficult recently to push along rate increases. We’re hearing more and more that shippers are looking for dedicated service. They’re freaked out that they’re not going to have capacity in the second half of the year, and they’re willing to lock in dedicated service. But they’re trying to lowball as much as they can.”

Starks said that trailer manufacturers need to better understand the freight market, because if they don’t, then they won’t understand their own business.

“You cannot be sucked into all these other issues,” he said. “When I talk to rail guys, the suppliers all understand the freight market in minute detail. In the trailer business, I don’t think everybody understands their market. You need to know exactly what customers are hauling and what their needs are.

“There isn’t one indicator that you need to be looking at to understand the economy, because one item is going to tell me about one particular sector, but all the data out there on individual capacity is enlightening. You need to understand what’s happening in the broader picture.”