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Strategic Analysis of North American Semi-Trailer Advanced Technology Markets

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  • 1. Strategic Analysis of North American Semi-Trailer Advanced Technology MarketsAdvanced Trailer Technologies to Generate Revenue of $3 Billion by 2018 Brief Summary NB03-18 September 2012
  • 2. ContentsSection 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 • 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 NB03-18 2
  • 3. ContentsSection 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 138 for Advanced Truck and Trailer Technologies NB03-18 3
  • 4. Research Scope, Objectives, Background, and MethodologyNB03-18 4
  • 5. Research Scope and Objectives Base Year 2011 Study Period 2008 to 2018 Forecast Period 2012 to 2018 Vehicle Type Semi-trailers: dry van, reefer, flatbed, tankers Geographical Scope North AmericaSemi-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 Source: Frost & Sullivan analysis. NB03-18 5
  • 6. Research Aims and ObjectivesAimThe aim of this study is to research, analyze, and forecast the North American semi-trailer production andtechnologies 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• 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 Source: Frost & Sullivan research. NB03-18 6
  • 7. Research MethodologyResearch Methodology: Frost & Sullivan’s research services are based on secondary and primaryresearch 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 seniorconsultants/industry analysts with original equipment suppliers, regulation authorities, and Tier 1 suppliers.Primary research accounts for 80.0 percent of the total research. Semi-Trailer Technologies Market: Key Industry Participants, North America, 2011 Key OEMs Key Suppliers Wabash National Corporation Meritor Wabco Utility Trailer Manufacturing Meritor Great Dane Trailers Inc. Hendrickson Hyundai Translead Bendix Stoughton semi-trailers Haldex Source: Frost & Sullivan analysis.NB03-18 7
  • 8. Key Questions This Study Will Answer Semi-Trailer Technologies Market: Key Questions This Study Will Answer, North America, 2011 What factors are affecting the North American semi-trailer technology markets? What is the growth potential for the North American semi-trailer technology markets? 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? Source: Frost & Sullivan analysis. NB03-18 8
  • 9. Definitions and SegmentationNB03-18 9
  • 10. Study DefinitionsGeographic ScopeThis analysis will focus on the North American market:United States of America and Canada. Segmentation Scope: Definition of Unit(s): The analysis will focus on the following • All figures are represented by one single unit. applications: Definition of Prices: 1. Semi-trailer market—OE • All prices are reported at the first level of 2. Semi-trailer mechanical systems market— distribution from the supplier to semi-trailer OEM. brakes, suspension, axles, semi-trailer • Prices are reported in U.S. dollars. aerodynamics Definition of Revenue: 3. Semi-trailer soft technologies market—safety • Revenue is calculated based on the number of systems and telematics 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. Source: Frost & Sullivan analysis. NB03-18 10
  • 11. Definition and Classification—Semi-Trailer Type Region Definition Dimensions Common Types A semi-trailer is used to Maximum width: 8.5 feet transport freight. It does not • Dry van/box Maximum height: 13.5 feet have a front axle and must be • Refrigerated Most common length: 53 feet coupled with a road tractor. In • Flatbed North Maximum gross weight limit: 80, 000 lbs North America, the majority of • Tanker America Maximum weight per tandem axle: 34,000 lbs semi-trailers have two Maximum weight per singe axle: 20,000 lbs “tandem” axles, each with dual wheels. 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 semi-trailers are used to transport temperature-critical freight such as produce. Reefer units rely on an external refrigerator unit and specialty temperature (Reefer) panels that keep the semi-trailer cold at all times. Flatbed semi-trailers are used primarily to transport heavy cargo such as heavy Flatbed 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. Tankers are used to transport gases and liquefied freight such as crude oil. The size Tanker and volume for tanker capacities vary widely as it typically ranges from 5,500 to 9,000 gallons. Source: Frost & Sullivan analysis. NB03-18 11
  • 12. Executive SummaryNB03-18 12
  • 13. 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: 1 strengthening of the regulatory environment, rising fuel prices, and an aging trailer population. The average age of semi-trailers in operation is 8.5 years with the market entering into its 2 replacement cycle as production is expected to reach 248,200 units in 2012. Total revenue for the advanced semi-trailer technologies market is projected to be $2.16 billion in 3 2012 growing from $2.04 billion in 2011. The significant impact of the CARB’s mandate could result in the widespread adoption of semi- 4 trailer aerodynamics as market penetration is forecasted to reach 56 percent by 2018. The strict standards of CSA 2010 are stimulating the interest in safety systems such as automatic 5 tire inflation systems that are expected to have a 48 percent market penetration rate in 2018. While brake and suspension markets will generate nearly 60 percent of total advanced 6 technology-related revenue by 2018, and the penetration of aerodynamics improvement technologies will increase over the 2012–2018 period. The fastest and strongest revenue growth opportunities will be achieved by safety and telematics technologies. Source: Frost & Sullivan analysis. NB03-18 13
  • 14. Executive Summary—Market Engineering MeasurementsSemi-trailer advanced technologies market revenue expected to increase to $2.98 billion by 2018. Semi-Trailer Technologies Market: Market Measurements, North America, 2011–2018 Market Overview Market Market Size for Market Stage Market Revenue Units/Volume Last Year of Estimate Study Period Growth $2.04 B 3.5 M $2.99 B (2011) (2011) (2018) Base Year Forecast Period Market Number of Semi- Market Growth Market Growth Concentration trailer OEMs Rate (Trailers) Rate 14.3% 5.6% 69% 30 (% of market share held by (active market competitors in (CAGR, 2012–2018) top 3 companies) base year)Decreasing Stable Increasing Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis. NB03-18 14
  • 15. Executive Summary—Top Three Competitors Comparative AnalysisAll three top OEMs show a high degree of focus in leveraging advanced technologies for brand differentiationand customer value enhancement. Advanced Advanced Technology Market Company Specialty Strength Technology Focus Share Leverage • Continuous effort towards acquiring speciality semi-trailer manufacturers and component • Strong brand image and suppliers to enhance product • Dry van market position in all keyWabash offerings; recent acquisition of • Reefers semi-trailer segments 29.0%National Walker Group Holdings LLC, a • Flatbeds • #1 in dry vans, #3 in 1 2 3 4 5 specialist in tankers; positioned reefers, #3 in flatbeds as a trailer and aerodynamic device provider • Improving brand image and • Highest number of advanced technology byGreat Dane manufacturing plants revamping semi-trailer product • Dry van 24.0% 1 2 3 4 5Trailers Inc. • Over 100 years of lineup; big expansion in market experience manufacturing plants and R&D centers Leading market in development • Boasts a strong well- and deployment of advanced developed networkUtility Trailer technological innovations in • Reefer • 17 consecutive years 16.0%Manufacturing reefer units; focused on 1 2 3 4 5 with the #1 selling reefer advancement to enable strong unit revenue generation Note: • 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. Source: Frost & Sullivan analysis. NB03-18 15
  • 16. Semi-Trailer Market Drivers and RestraintsTwo major factors in CSA 2010 and the replacement cycle will drive the semi-trailer market in the mediumterm. Semi-Trailer Technologies Market: Key Market Drivers and Restraints, North America, 2011–2018 CSA 2010 driving adoption of advanced Aging semi- Favorable Fleets showing trailer Fuel price Synergies technologies freight greater demand population volatility between truck and transport for soft semi-trailer OEMs trends technologies in semi-trailersDrivers DriversRestraints Restraints Lack of sufficient legislative and ROI Vertical integration Longer support delaying growth Too many advanced technologies chasing restricting market equipment life spurt in telematics and Volatile economic cycle too few consumer penetration potential safety systems environment for independent dollars Denotes current impact suppliers Source: Frost & Sullivan analysis. Denotes long-term impact NB03-18 16
  • 17. Executive Summary—Semi-Trailer OEM Market ShareTop three OEMs hold 69% of the total semi-trailer market share; Wabash National continued to lead the marketwith $1.20 billion in revenue in 2011. Semi-Trailer Technologies Market: OEM Market Shares, North America, 2011 The top three semi-trailer market participants Others control 69 percent of the total market. Wabash 17.0% 29.0% 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’sStoughton position as a market leader in the dry van 5.0% segment as well as third in the reefer and flatbed segments. Great Dane, Utility, Hyundai Translead, and Stoughton are next in the market rankings. The Hyundai majority of semi-trailer OEMs, especially top-tierTranslead 9.0% participants, offer full product portfolios featuring all semi-trailer types. The other companies (less than 5% market share) primarily focus on specific specialty semi- Utility trailers and fleet operations. 16.0% Great Dane 24.0% Note “Others” include companies such as: Fontaine Trailer Company, Vanguard National semi-trailer Corp., MANAC, Strick Corp. Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis. NB03-18 17
  • 18. Executive Summary—Total Market Unit Shipment/Revenue SnapshotSemi-trailer technologies market is expected to reach $2.99 billion in 2018. Semi-Trailer Technologies Market: Total Unit Shipment/Revenue Forecast, North America, 2011 and 2018 Air Disc Brake Drum Brake Air Ride Spring Axle Aerodynamics ABS RSC ATIS TPMS Telematics ~ $2,989,452,699~ $2,037,183,295 1,000,000 $178,925,904 $108,219,300 $152,757,150 900,000 $418,929,840 $104,371,575 800,000 $191,888,460 $333,583,250 700,000 Unit Shipment $412,780,500 600,000 500,000 $964,592,125 400,000 $1,332,518,400 300,000 200,000 100,000 $373,659,895 $454,409,595 0 2011 Braking Suspension Axle Aerodynamics Safety Telematics 2018 TechnologyBraking Suspension Braking SuspensionAxle Aerodynamics Note: Graph in center represents unit shipment data for 2011. Axle AerodynamicsSafety Telematics Outside graphs represent revenue for 2011 and 2018. Safety Telematics Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis. NB03-18 18
  • 19. Special Focus (Soft Technologies): Trailer Telematics Market SnapshotSigns of development are evident as the majority of the trailer population is not penetrated. Increasedopportunities exist for telematics vendors to provide solutions and services with end-to-end asset visibility. Trailer Telematics Market: Trailer Telematics Trailer Telematics Market: Product and Service Range Subscriber Penetration, North America, 2011 and 2018 North America, 2011 Trailer Population Entry Level Mid Level High End Trailer Telematics Subscriber Penetration Hardware Cost 8,000,000 Range $200–$350 $350–$550 $740– $1,400 6,930,750 7,000,000 Service Cost 6,305,000 $4.5–$10 $10–$20 $20–$35 Range 6,000,000 Note: The above is the market average selling priceTrailer Population (vendor buyer) of hardware and services. 5,000,000 Trailer Telematics Market: Key Market Participants and 4,000,000 Communication Technologies, North America, 2011 3,000,000 Supplier Manufacturer 2,000,000 20.0% SkyBitz, ID Systems, Qualcomm, 14.0% Major Telematics 1,000,000 Star Trak, PAR LMS, TransCore, Solution Providers Thermo King, and others 0 2011 2018 Communications Satellite > Cellular > Wi-Fi > Multi- Year Technologies modal Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis. NB03-18 19
  • 20. Executive Summary—Key Conclusions and Future Outlook Parameters Current Future • The potential size of the total market is vast and not fully penetrated by 6.4 million semi-trailers. Expected to have a steady growth without Market Status any sudden spikes as recessionary • The advanced semi-trailer market is the launch pad for environment persists robust growth in unit shipments and revenue. • Almost 80% of the market is consolidated by four • Aggressive competition from current top players (Wabash, Great Dane, Utility, and Hyundai market leaders looking to provide complete Semi-trailer OEM Translead). advanced semi-trailers to end-users. Competition • The remaining 20% of market is highly fragmented • Low expectations from fragmented market (Fontaine, Stoughton, Vanguard, and others). group Growing awareness and interest in advanced semi- Higher levels of awareness among end- Solutions trailer technological solutions are combating users pushing technology penetration government regulations and rising fuel costs. levels towards mid and high levels • Suppliers: Nascent market with intense competition • Ability to offer customized solution for among market participants challenging for market various fleet operations and situationsValue Proposition positioning • Prognostics and preventive maintenance • Fleets: Improved productivity, asset monitoring, helping fleet achieve optimal efficiency operating costs, and fuel economyBarriers to Entry in Major portion of the market is consolidated with semi- Low cost and quality semi-trailer North American trailer OEMs and Tier 1 suppliers, creating big hurdle in technologies not expected to be able to Market creating brand identity penetrate the market Source: Frost & Sullivan analysis. NB03-18 20
  • 21. Market TrendsEconomic environment weighs heavily on the trailer advanced technologies market. Semi-Trailer Technologies Market: Market Trends, North America, 2011 Reefer semi-trailers are expected to experience slowProduct quality, price, financing The market is experiencing a options, and after-purchase growth due to the impact of the Food Safety Modernization recovery from a recessionary service are becoming competitive factors among Act. environment and equipment OEMs. replacement needs. The continued growth of the The boom in the natural gassemi-trailer market will depend Market Trends industry could fuel a surge in heavily on the recovery of the overall economy. tanker trailers. All market participants face A recessionary environment downward pressure on prices Semi-trailer production volume encourages the use of mobilefrom highly price sensitive end- is expected to experience resources to optimize fleet users. short-term growth as the operations and logistics. lifecycle of a large chunk of semi-trailers nears its end Source: Frost & Sullivan analysis. NB03-18 21
  • 22. Technology TrendsGrowing awareness of semi-trailer technology is expected to result in increasing adoption. Semi-Trailer Technologies Market: Technology Trends, North America, 2011 New technologies will require The increasing trend towards maintenance technicians to Safety technologies such as synergistic collaboration and adapt and learn new repair TPMS, ATIS, and RSC, and technology development focus procedures. advanced braking technologies on the virtual integration are being installed on the between semi-trailer OEMs and component suppliers. upcoming generation of semi- trailers. Semi-trailer OEMs offer Semi-trailer OEMs will “intelligent semi-trailers” that increasingly focus on provide fleets with added lightweight semi-trailers Technology through enhanced designs, performance, theft prevention, Trends materials, and lighter real-time data from telematics, and safety enhancements. components to ensure greater payload and productivity. Vertical integration and Stringent emission and fuel modualization of semi-trailer regulations will drive R&D and components are expected to The productive lifecycle of new the adoption of innovative become industry standards. semi-trailers is about 15 years, if semi-trailer technologies. properly maintained. Source: Frost & Sullivan analysis NB03-18 22
  • 23. The Last Word—Five Big Predictions The level of distributed electronics in trailers is increasingly benefiting trailer safety, connectivity, and management. This will necessitate the creation of electronic interfaces 1 with key trailer systems and sub-systems. Trailer telematics are poised for rapid organic growth. Untethered trailer power management and the creation of a multiplex electronic 2 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. 3 Recessionary/slow growth economic environment continues to pose hurdles to rapid market adoption. OEMs will use advanced technologies to differentiate products from competitors. However, 4 too many technologies chasing too few consumer dollars will make it difficult for OEMs to choose the right set of technologies for vertical integration. The advanced trailer technologies market should grow at 5.5 percent CAGR indicating 5 additional revenue generation equivalent to $0.82 billion within the 2012–2018 period. Source: Frost & Sullivan analysis. NB03-18 23
  • 24. Market Engineering MethodologyOne of Frost & Sullivan’s core deliverablesis its Market Engineering studies. Theyare based on our proprietary MarketEngineering Methodology. This approach,developed across the 50 years ofexperience assessing global markets,applies engineering rigor to the oftennebulous art of market forecasting andinterpretation.A detailed description of the methodologycan be found here. Source: Frost & Sullivan research NB03-18 24
  • 25. The Frost & Sullivan StoryNB03-18 25
  • 26. Who is Frost & Sullivan • The Growth Consulting Company • Founded in 1961, Frost & Sullivan has over 50 years of assisting clients with their decision-making and growth issues. • Over 1,700 Growth Consultants and Industry Analysts across 32 global locations. • Over 10,000 clients worldwide - emerging companies, the global 1000 and the investment community. • Developers of the Growth Excellence Matrix–industry leading growth positioning tool for corporate executives. • Developers of T.E.A.M. Methodology, proprietary process to ensure that clients receive a 360o perspective of technology, markets and growth opportunities. • Three core services: Growth Partnership Services, Growth Consulting and Career Best Practices. NB03-18 26
  • 27. What Makes Us Unique• Exclusively Focused on Growth • 360o Perspective TM Global thought leader exclusively focused on Proprietary T.E.A.M. Methodology integrates addressing client growth strategies and plans– all 6 critical research methodologies to Team actively engaged in researching and significantly enhance the accuracy of decision developing of growth models that enable clients making and lower the risk of implementing to achieve aggressive growth objectives. growth strategies.• Industry Breadth • Growth Monitoring Cover the broad spectrum of industries and Continuously monitor changing technology, technologies to provide clients with the ability to markets and economics and proactively address look outside the box and discover new and clients growth initiatives and position. innovative ideas. • Trusted Partner• Global Perspective Working closely with client Growth Teams– 32 global offices ensure that clients receive a helping them generate new growth initiatives global coverage/perspective based on regional and leverage all of Frost & Sullivan assets to expertise. accelerate their growth. NB03-18 27
  • 28. T.E.A.M. Methodology• Frost & Sullivan’s proprietary T.E.A.M. methodology, ensures that clients have complete “360 Degree Perspective” from which to drive decision-making. Technical, Econometric, Application, and Market information ensures that clients have a comprehensive view of industries, markets and technology. Technical Real-time intelligence on technology, including emerging technologies, new R&D breakthroughs, technology forecasting, impact analysis, groundbreaking research, and licensing opportunities. Econometric In-depth qualitative and quantitative research focused on timely and critical global, regional, and country specific trends, including the political, demographic, and socioeconomic landscapes. Application Insightful strategies, networking opportunities, and best practices that can be applied for enhanced market growth; interactions between the client, peers, and Frost & Sullivan representatives that result in added value and effectiveness. Market Global and regional market analysis, including drivers and restraints, market trends, regulatory changes, competitive insights, growth forecasts, industry challenges, strategic recommendations, and end-user perspectives. NB03-18 28
  • 29. Global Perspective • 1,700 staff across every major market worldwide • Over 10,000 clients worldwide from emerging to global 1000 companies NB03-18 29