Strategic Analysis of North American Semi-Trailer Advanced Technology Markets

Strategic Analysis of North American Semi-Trailer Advanced Technology Markets Semi-Trailer Advanced Technology Markets

Advanced Trailer Technologies to Generate Revenue of $3 Billion by 2018

NB03-18September 2012

Brief Summary

Contents

Section Slide Numbers

Executive Summary 5

Research Scope, Objectives, Methodology, and Background 15

Definitions and Segmentation 20

Mega Trends and Industry Convergence Implications 24

Total Market —

• External Challenges: Drivers and Restraints 33

• Semi-Trailer Technologies Market Analysis 45

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• Semi-Trailer Technologies Market Analysis 45

• Semi-Trailer Technologies Market: Chassis 52

• Semi-Trailer Technologies Market: Aerodynamics 59

• Semi-Trailer Technologies Market: Safety Systems 65

• Semi-Trailer Technologies Market: Telematics 73

• Forecasts and Trends 81

• Market Share and Competitive Analysis 110

Contents

Section Slide Numbers

Conclusions and Future Outlook 113

Appendix 116

Key Company Profiles: Semi-Trailer OEMs 120

Key Company Profiles: Chassis and Safety Suppliers 125

Key Company Profiles: Telematics Suppliers 129

Voice of Customer Research—U.S. Fleet Managers’ Desirability and Willingness to Pay for Advanced Truck and Trailer Technologies

138

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for Advanced Truck and Trailer Technologies

Research Scope, Objectives, Background, and Methodology

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Methodology

Research Scope and Objectives

Semi-trailers: dry van, reefer, flatbed, tankersSemi-trailers: dry van, reefer, flatbed, tankersVehicle Type

2012 to 20182012 to 2018Forecast Period

2008 to 20182008 to 2018Study Period

20112011Base Year

North AmericaNorth AmericaGeographical Scope

Semi-Trailer Technologies Market: Semi-trailer Production Unit Shipments, North America, 2011–2018

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Source: Frost & Sullivan analysis.

Semi-Trailer Technologies Market: Semi-trailer Production Unit Shipments, North America, 2011–2018

Year Unit Shipments (Annual)

2011 217,000

2012 248,200

2013 255,500

2014 255,200

2015 247,000

2016 242,000

2017 240,500

2018 242,100

Research Aims and Objectives

Aim

The aim of this study is to research, analyze, and forecast the North American semi-trailer production and technologies market.

Objectives

• Provide a strategic overview of the North American semi-trailer market, including demand analysis, key technology trends, market trends, market drivers, and restraints in each geographical region

• Determine market size and provide forecasts of trailer demand and breakdown by region

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Source: Frost & Sullivan research.

• Provide forecasts of penetration rate, unit shipment, revenue, and pricing analysis of major chassis (brakes, suspension, and axles), safety systems (ABS, RSC, ATIS, TPMS, and etc.), and Telematics technologies

• Competitor analysis: Analyze competitive factors, competitor market shares (OEMs), competitive benchmarking, and product portfolio analysis

Research Methodology: Frost & Sullivan’s research services are based on secondary and primary

research data.

Secondary Research: Extraction of information from existing reports and project material within the Frost

& Sullivan database includes data and information gathered form technical papers, specialized magazines,

seminars, and Internet research.

Primary Research: More than 10 interviews have been conducted over the phone by senior

consultants/industry analysts with original equipment suppliers, regulation authorities, and Tier 1 suppliers.

Primary research accounts for 80.0 percent of the total research.

Research Methodology

Semi-Trailer Technologies Market: Key Industry Participants, North America, 2011

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Key OEMs

Wabash National Corporation

Utility Trailer Manufacturing

Great Dane Trailers Inc.

Hyundai Translead

Stoughton semi-trailers


Semi-Trailer Technologies Market: Key Industry Participants, North America, 2011

Key Suppliers

Meritor Wabco

Meritor

Hendrickson

Bendix

Haldex

Key Questions This Study Will Answer

What is the growth potential for the North American semi-trailer technology markets?

What factors are affecting the North American semi-trailer technology markets?

Semi-Trailer Technologies Market: Key Questions This Study Will Answer, North America, 2011

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How will the changing trucking industry affect the semi-trailer market?

What are the current technologies and product portfolios of the key industry participants?

What are the key market and technology trends for the semi-trailer industry?


Definitions and Segmentation

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Definitions and Segmentation

Study Definitions

Geographic Scope

This analysis will focus on the North American market:

United States of America and Canada.

Geographic Scope

This analysis will focus on the North American market:

United States of America and Canada.

Segmentation Scope:

The analysis will focus on the following applications:

Segmentation Scope:

The analysis will focus on the following applications:

Definition of Unit(s):

• All figures are represented by one single unit.

Definition of Prices:

Definition of Unit(s):

• All figures are represented by one single unit.

Definition of Prices:

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1. Semi-trailer market—OE

2. Semi-trailer mechanical systems market—brakes, suspension, axles, semi-trailer aerodynamics

3. Semi-trailer soft technologies market—safety systems and telematics

1. Semi-trailer market—OE

2. Semi-trailer mechanical systems market—brakes, suspension, axles, semi-trailer aerodynamics

3. Semi-trailer soft technologies market—safety systems and telematics

• All prices are reported at the first level of distribution from the supplier to semi-trailer OEM.

• Prices are reported in U.S. dollars.

Definition of Revenue:

• Revenue is calculated based on the number of units and the price of a single unit.

• All prices are reported at the first level of distribution from the supplier to semi-trailer OEM.

• Prices are reported in U.S. dollars.

Definition of Revenue:

• Revenue is calculated based on the number of units and the price of a single unit.

Forecast Assumptions:

• Forecasts calculations are reported at the OEM level of distribution

• Forecasts for unit shipment and revenue of semi-trailer components are calculated through using a weighted average of 2.15 axles per semi-trailer.

Forecast Assumptions:

• Forecasts calculations are reported at the OEM level of distribution

• Forecasts for unit shipment and revenue of semi-trailer components are calculated through using a weighted average of 2.15 axles per semi-trailer.


Definition and Classification—Semi-Trailer Type

Name Definition

Region Definition Dimensions Common Types

NorthAmerica

A semi-trailer is used to transport freight. It does not have a front axle and must be coupled with a road tractor. In North America, the majority of semi-trailers have two “tandem” axles, each with dual wheels.

Maximum width: 8.5 feetMaximum height: 13.5 feet

Most common length: 53 feetMaximum gross weight limit: 80, 000 lbs

Maximum weight per tandem axle: 34,000 lbsMaximum weight per singe axle: 20,000 lbs

• Dry van/box• Refrigerated

• Flatbed• Tanker

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Name Definition

Dry Van/Box Dry van semi-trailers are the most prevalent type of semi-trailer used in the trucking industry and is frequently used to carry dry products such as boxed goods.

Refrigerated

(Reefer)

Reefer semi-trailers are used to transport temperature-critical freight such as produce. Reefer units rely on an external refrigerator unit and specialty temperature panels that keep the semi-trailer cold at all times.

FlatbedFlatbed semi-trailers are used primarily to transport heavy cargo such as heavy machinery and construction materials. Flatbed semi-trailers must strap their freight down as the trailer consists only of a load floor and removable side rails.

TankerTankers are used to transport gases and liquefied freight such as crude oil. The size and volume for tanker capacities vary widely as it typically ranges from 5,500 to 9,000 gallons.


Executive Summary

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Executive Summary

Executive Summary—Key FindingsThe next generation of advanced semi-trailer design has been set in motion.

The proliferation of advanced semi-trailer technologies will be driven by three crucial factors: strengthening of the regulatory environment, rising fuel prices, and an aging trailer population. 1

The average age of semi-trailers in operation is 8.5 years with the market entering into itsreplacement cycle as production is expected to reach 248,200 units in 2012.2

Total revenue for the advanced semi-trailer technologies market is projected to be $2.16 billion in 2012 growing from $2.04 billion in 2011. 3

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2012 growing from $2.04 billion in 2011.

The significant impact of the CARB’s mandate could result in the widespread adoption of semi-trailer aerodynamics as market penetration is forecasted to reach 56 percent by 2018. 4

The strict standards of CSA 2010 are stimulating the interest in safety systems such as automatictire inflation systems that are expected to have a 48 percent market penetration rate in 2018.5

While brake and suspension markets will generate nearly 60 percent of total advancedtechnology-related revenue by 2018, and the penetration of aerodynamics improvementtechnologies will increase over the 2012–2018 period. The fastest and strongest revenue growthopportunities will be achieved by safety and telematics technologies.

6

Executive Summary—Market Engineering MeasurementsSemi-trailer advanced technologies market revenue expected to increase to $2.98 billion by 2018.

Market Stage

Growth

Market Revenue

$2.04 B

(2011)

Market Units/Volume Estimate

3.5 M

(2011)

Market Size for Last Year of Study Period

$2.99 B

(2018)

Semi-Trailer Technologies Market: Market Measurements, North America, 2011–2018Market Overview

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Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.

Forecast Period Market Growth Rate

5.6%

(CAGR, 2012–2018)

(2011) (2011) (2018)

Base Year Market Growth Rate (Trailers)

14.3%

Stable IncreasingDecreasing

Market Concentration

69%(% of market share held by

top 3 companies)

Number of Semi-trailer OEMs

30

(active market competitors in base year)

Executive Summary—Top Three Competitors Comparative AnalysisAll three top OEMs show a high degree of focus in leveraging advanced technologies for brand differentiation and customer value enhancement.

Company Specialty StrengthAdvanced Technology

FocusMarket Share

Advanced Technology Leverage

Wabash National

• Dry van• Reefers• Flatbeds

• Strong brand image and market position in all key

semi-trailer segments• #1 in dry vans, #3 in reefers, #3 in flatbeds

• Continuous effort towardsacquiring speciality semi-trailer manufacturers and component suppliers to enhance product offerings; recent acquisition of Walker Group Holdings LLC, a specialist in tankers; positioned

as a trailer and aerodynamic device provider

29.0%1 52 3 4

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device provider

Great Dane Trailers Inc.

• Dry van

• Highest number of manufacturing plants • Over 100 years of market experience

• Improving brand image and advanced technology by

revamping semi-trailer product lineup; big expansion in

manufacturing plants and R&D centers

24.0%

Utility Trailer Manufacturing

• Reefer

• Boasts a strong well-developed network

• 17 consecutive years with the #1 selling reefer

unit

Leading market in development and deployment of advanced technological innovations in

reefer units; focused on advancement to enable strong

revenue generation

16.0%


1 52 3 4

1 52 3 4

• Frost & Sullivan proprietary list of key factors and attributes considered for analysis of data. • Indices are representative and are for comparative purposes only.• Indices on scale of 5, with 1 being lowest and 5 being highest.

Note:

Semi-Trailer Market Drivers and RestraintsTwo major factors in CSA 2010 and the replacement cycle will drive the semi-trailer market in the medium term.

Driv

ers

Driv

ers

CSA 2010 driving adoption of advanced

technologies

Aging semi-trailer

populationSynergies

between truck and semi-trailer OEMs

Fuel price volatility

Favorable freight

transport trends

Fleets showing greater demand

for soft technologies in

semi-trailers

Semi-Trailer Technologies Market: Key Market Drivers and Restraints, North America, 2011–2018

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Denotes long-term impact

Denotes current impactSource: Frost & Sullivan analysis.

Re

stra

ints

Re

stra

ints

Too many advanced technologies chasing

too few consumer dollars

Longer equipment life

cycle

Vertical integration restricting market

penetration potential for independent

suppliers

Volatile economic environment

Lack of sufficient legislative and ROI

support delaying growth spurt in telematics and

safety systems

Executive Summary—Semi-Trailer OEM Market ShareTop three OEMs hold 69% of the total semi-trailer market share; Wabash National continued to lead the market with $1.20 billion in revenue in 2011.

Wabash29.0%

Stoughton5.0%

Others17.0%

Semi-Trailer Technologies Market: OEM Market Shares, North America, 2011

The top three semi-trailer market participants control 69 percent of the total market.

Wabash National led the market with a 29 percent market share and $1.20 billion in 2011 revenue. The company’s consistent focus on end-users and semi-trailer technology has solidified it’s position as a market leader in the dry van segment as well as third in the reefer and flatbed segments.

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Great Dane24.0%

Utility16.0%

Hyundai Translead

9.0%

segments.

Great Dane, Utility, Hyundai Translead, and Stoughton are next in the market rankings. The majority of semi-trailer OEMs, especially top-tier participants, offer full product portfolios featuring all semi-trailer types.

The other companies (less than 5% market share) primarily focus on specific specialty semi-trailers and fleet operations.

Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.

Note “Others” include companies such as: Fontaine Trailer Company, Vanguard National semi-trailer Corp., MANAC, Strick Corp.

$333,583,250

$104,371,575

$152,757,150

$108,219,300

700,000

800,000

900,000

1,000,000

Air Disc Brake Drum Brake Air Ride Spring

Axle Aerodynamics ABS RSC

ATIS TPMS Telematics

Semi-Trailer Technologies Market: Total Unit Shipment/Revenue Forecast, North America, 2011 and 2018

Executive Summary—Total Market Unit Shipment/Revenue SnapshotSemi-trailer technologies market is expected to reach $2.99 billion in 2018.

$412,780,500

$191,888,460

$418,929,840

$178,925,904

Un

it S

hip

me

nt

~ $2,037,183,295~ $2,989,452,699

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$373,659,895

$964,592,125

Braking SuspensionAxle AerodynamicsSafety Telematics

0

100,000

200,000

300,000

400,000

500,000

600,000

Braking Suspension Axle Aerodynamics Safety Telematics

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.

Note: Graph in center represents unit shipment data for 2011.Outside graphs represent revenue for 2011 and 2018.

2011

$454,409,595

$1,332,518,400

$412,780,500

Braking SuspensionAxle AerodynamicsSafety Telematics

2018

Un

it S

hip

me

nt

Technology

Special Focus (Soft Technologies): Trailer Telematics Market Snapshot Signs of development are evident as the majority of the trailer population is not penetrated. Increased opportunities exist for telematics vendors to provide solutions and services with end-to-end asset visibility.

Trailer Telematics Market: Trailer Telematics Subscriber Penetration, North America, 2011 and 2018

Trailer Telematics Market: Product and Service Range North America, 2011

Service Cost Range

Service Cost Range

Hardware Cost Range

Hardware Cost Range

Entry LevelEntry Level Mid LevelMid Level High EndHigh End

$200–$350$200–$350 $350–$550$350–$550 $740– $1,400$740– $1,400

$4.5–$10$4.5–$10 $10–$20$10–$20 $20–$35$20–$35

Note: The above is the market average selling price

(vendor �� buyer) of hardware and services.

6,000,000

7,000,000

8,000,000

Trailer Population

Trailer Telematics Subscriber Penetration

Tra

ile

r P

op

ula

tio

n

6,305,000

6,930,750

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Trailer Telematics Market: Key Market Participants and Communication Technologies, North America, 2011

Supplier Manufacturer

Major Telematics

Solution Providers

SkyBitz, ID Systems, Qualcomm,

Star Trak, PAR LMS, TransCore,

Thermo King, and others

Communications

Technologies

Satellite > Cellular > Wi-Fi > Multi-

modal

(vendor �� buyer) of hardware and services.

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

2011 2018

Tra

ile

r P

op

ula

tio

n

14.0%

20.0%

Year

Parameters Current Future

Market Status

• The potential size of the total market is vast and not

fully penetrated by 6.4 million semi-trailers.

• The advanced semi-trailer market is the launch pad for

robust growth in unit shipments and revenue.

Expected to have a steady growth without

any sudden spikes as recessionary

environment persists

Semi-trailer OEM

Competition

• Almost 80% of the market is consolidated by four

players (Wabash, Great Dane, Utility, and Hyundai

Translead).

• The remaining 20% of market is highly fragmented

(Fontaine, Stoughton, Vanguard, and others).

• Aggressive competition from current top

market leaders looking to provide complete

advanced semi-trailers to end-users.

• Low expectations from fragmented market

group

Growing awareness and interest in advanced semi- Higher levels of awareness among end-

Executive Summary—Key Conclusions and Future Outlook

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Solutions

Growing awareness and interest in advanced semi-

trailer technological solutions are combating

government regulations and rising fuel costs.

Higher levels of awareness among end-

users pushing technology penetration

levels towards mid and high levels

Value Proposition

• Suppliers: Nascent market with intense competition

among market participants challenging for market

positioning

• Fleets: Improved productivity, asset monitoring,

operating costs, and fuel economy

• Ability to offer customized solution for

various fleet operations and situations

• Prognostics and preventive maintenance

helping fleet achieve optimal efficiency

Barriers to Entry in

North American

Market

Major portion of the market is consolidated with semi-

trailer OEMs and Tier 1 suppliers, creating big hurdle in

creating brand identity

Low cost and quality semi-trailer

technologies not expected to be able to

penetrate the market


Market TrendsEconomic environment weighs heavily on the trailer advanced technologies market.

The market is experiencing a recovery from a recessionary environment and equipment

replacement needs.

Reefer semi-trailers are expected to experience slow

growth due to the impact of the Food Safety Modernization

Act.

Product quality, price, financing Product quality, price, financing options, and after-purchase

service are becoming competitive factors among

OEMs.

Semi-Trailer Technologies Market: Market Trends, North America, 2011

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Market Trends

Semi-trailer production volume is expected to experience short-term growth as the

lifecycle of a large chunk of semi-trailers nears its end

The boom in the natural gas industry could fuel a surge in

tanker trailers.

All market participants face downward pressure on prices

from highly price sensitive end-users.

A recessionary environment encourages the use of mobile

resources to optimize fleet operations and logistics.

The continued growth of the semi-trailer market will depend heavily on the recovery of the

overall economy.


New technologies will require maintenance technicians to adapt and learn new repair

procedures.

Semi-trailer OEMs offer

The increasing trend towards synergistic collaboration and

technology development focus on the virtual integration

between semi-trailer OEMs and component suppliers.

Semi-trailer OEMs will

Safety technologies such as TPMS, ATIS, and RSC, and

advanced braking technologies are being installed on the

upcoming generation of semi-trailers.

Technology TrendsGrowing awareness of semi-trailer technology is expected to result in increasing adoption.

Semi-Trailer Technologies Market: Technology Trends, North America, 2011

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Semi-trailer OEMs offer “intelligent semi-trailers” that

provide fleets with added performance, theft prevention, real-time data from telematics,

and safety enhancements.

Vertical integration and modualization of semi-trailer components are expected to become industry standards.

The productive lifecycle of new semi-trailers is about 15 years, if

properly maintained.

Stringent emission and fuel regulations will drive R&D and

the adoption of innovative semi-trailer technologies.

Semi-trailer OEMs will increasingly focus on

lightweight semi-trailers through enhanced designs,

materials, and lighter components to ensure greater

payload and productivity.

Technology Trends

Source: Frost & Sullivan analysis

The Last Word—Five Big Predictions

2

Untethered trailer power management and the creation of a multiplex electronic infrastructure in trailers for better intra-trailer and trailer-tractor communication will emerge as key R&D focal points for trailer OEMs and suppliers.

Diesel fuel volatility and a strengthening regulatory environment will lead to fleet managers and owner-operators pulling advanced technologies rather than OEMs pushing them.

1

The level of distributed electronics in trailers is increasingly benefiting trailer safety, connectivity, and management. This will necessitate the creation of electronic interfaces with key trailer systems and sub-systems. Trailer telematics are poised for rapid organic growth.

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3and owner-operators pulling advanced technologies rather than OEMs pushing them. Recessionary/slow growth economic environment continues to pose hurdles to rapid market adoption.

4

OEMs will use advanced technologies to differentiate products from competitors. However, too many technologies chasing too few consumer dollars will make it difficult for OEMs to choose the right set of technologies for vertical integration.

5The advanced trailer technologies market should grow at 5.5 percent CAGR indicating additional revenue generation equivalent to $0.82 billion within the 2012–2018 period.

Market Engineering Methodology

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They

are based on our proprietary Market

Engineering Methodology. This approach,

developed across the 50 years of

experience assessing global markets,

applies engineering rigor to the often

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nebulous art of market forecasting and

interpretation.

A detailed description of the methodology

can be found here.

Source: Frost & Sullivan research

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Documents

Strategic Analysis of North American Semi-Trailer Advanced Technology Markets