When forecasting the truckload (TL) and less-than-truckload (LTL) markets, ACT Research utilizes three primary metrics to measure industry capacity (supply):

• Class 8 tractor retail sales
• Class 8 tractor population, under 11 years old
• Truckload net income margin

Class 8 tractor retail sales are the new vehicles entering the fleet each quarter. We forecast Class 8 tractor retail sales to provide insights into how many new vehicles we believe will enter the fleet over the long term.

Class 8 tractor population measures the total active fleet under 11 years of age. Through our work on both the new and used vehicle side and conferring with fleets, we see that trucks under 11 years of age do most of the freight hauling. Therefore, our focus for modeling capacity focuses on under-11 tractors.

TL net income margin: As we often say, when truckers make money, they buy trucks. This measures the publicly traded truckload carriers' net income margin, which we have tracked since the early 2000s, and is an excellent proxy for the industry's health. This, in conjunction with the other two Class 8 tractor metrics, gives us an expectation of the number of new Class 8 tractors the fleet will purchase, given their current financial health.