ACT Research: Freight Outlook Brightening

Freight demand is nearing an upturn as growing goods spending, a turning inventory cycle and rising industrial production will add to freight demand this year, according to ACT Research, which projected that after a two-year downturn, the upturn is likely to being within the next few months.

“We’re frequently asked who’s buying all these trucks with spot rates at sharp operating loss levels and carrier margins under severe pressure. In our view, private fleets who operate vehicles on longer trade cycles are likely planning for the 2027 emissions regulations, which may drive record demand for new commercial vehicles in the next few years,” Tim Denoyer, vice president and senior analyst of ACT Research, said. “For the past year, cost economics have taken a back seat to supply chain resilience and planning for upcoming climate rules, as we see it, supporting new truck demand and pressuring freight rates. But this is changing in 2024 as order intake has softened and private fleets join for-hire fleets in reconsidering costly capacity additions. We think a lower Class 8 tractor supply dynamic will be very helpful in bringing freight back to the for-hire market.

“With some help from rising used tractor exports to Mexico, we estimate the Class 8 tractor fleet is nearly finished growing for a while. Since the start of the pandemic, the fleet has grown 12%, but our Freight Composite, which measures the freight economy in real GDP terms, has grown even more. Large capacity additions of the past two years were a primary factor driving rates down, and we think the slight closing of the equipment supply spigot in a growing economy will help shake the truckload market out of the doldrums.”

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