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Biofuel demand keeping commodity trailers strong

Posted: August 1, 2014

NEW YORK — A private trailer manufacturer focused on the agricultural market says that commodity trailer sales remain very robust, despite a downturn in the overall market.

Speaking to transportation market analysts at Bear Stearns in New York, the trailer maker said equipment for grain, wheat and soybean is one of the few subsegments of the trailer market that is seeing reasonably healthy levels of demand.

However, he said the big driver of this demand in the U.S. — ethanol and other biofuels — is having a mixed effect on the livestock trailer market. Driven demand for boutique biofuels has led to significant increases in the feed prices, causing many ranchers to sell much of their livestock rather than pay more for feed.

So, at the same time, there’s been some weakness in trailers typically used by ranchers to haul livestock.

Meanwhile, U.S. flatbed trailers remain weak, mainly because of continued softening of the housing market south of the border.

Going forward, the contact said his biggest worry is that the industry will see more competition from Asian manufacturers. Specifically, there’s rumors that
Hyundai is looking to expand its plant in Tijuana, Mexico and is also looking at possibly building a plant in either eastern Mexico or the southeastern U.S. for growth in the U.S. market.

General trailer demand remains at “trough-like levels” and an uptick in demand anytime in the near future isn’t expected, said another Bear Stearns contact at a large trailer manufacturer in the U.S.

While the source’s company does not make composite trailers, he acknowledged growth in the segment and added his firm was seriously considering entering the market. Composite trailers have so far penetrated roughly 20 percent of the total market.

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