Trajectory tracking control of an underactuated mechanical system is a challenging task when tracking errors of all the system coordinates need to be minimized, while the number of control inputs is limited. This paper addresses the observer-based multivariable control of a class of nonlinear, underactuated Lagrangian systems with application to trajectory tracking and sway control of a 3D overhead gantry crane subject to Coulomb friction. A second-order sliding mode observer is proposed for the estimation of velocities.