ACT Research: Equipment Supply-Freight Demand Imbalance Coming, Freight Rate Recession Likely

Posted on 13. Mar, 2019 by in NA CV OUTLOOK, Press Releases

Net Freight from OUT 3-13-19

 

According to ACT Research’s (ACT) latest release of the North American Commercial Vehicle OUTLOOK, a freight recession is not out of the question, but the easier call is a rate recession as truck supply-freight demand fall out of balance.

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“While there is a very low probability and no expectation of an economy-wide recession in 2019, freight-related data points have been sufficiently bad in breadth and duration to note that a freight recession is possible, although unlikely,” said Kenny Vieth, ACT’s President and Senior Analyst. He elaborated, “That said, slower freight growth, an easing of driver supply constraints, the resumption of the long-run freight productivity trend, and strong Class 8 tractor fleet growth will increasingly pressure rates and by extension, trucker profitability in 2019.”

Regarding heavy vehicle demand, Vieth noted, “The rolling-over of ACT’s Dashboard guidance at the end of 2018 suggests today’s order weakness will transition from ‘too much backlog’ to an equipment supply-freight demand imbalance in the near future.” Despite Vieth’s cautious tenor, he noted that the heavy commercial vehicle market continues to benefit from a still-broad spectrum of supply and demand-side triggers, including still-strong carrier profits, desirable new technologies, better fuel economy, and for trailers increased demand for drop-and-hook to keep drivers moving.

Regarding ACT’s medium duty forecasts, Vieth said, “Preliminary February net orders were moderately above the current trend. Orders averaging 24,100 units per month for the past six months have diminished from the strong upward pressure they exerted on the forecast in the first half of 2018.”

CLICK for more information about ACT’s NA Commercial Vehicle OUTLOOK.

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ACT’s 60th seminar is scheduled for March 25-27, 2019, and will feature a trucker/fleet panel, as well as discussions on near-term demand of commercial vehicles and the impacts of emerging technologies on change in the North American commercial vehicle industry.

CLICK for information about Seminar #60.