ACT Research: Much to Like About Economy, Freight and Commercial Vehicle Demand
APR 29, 2021 - 6:59 am
In the most recent release of its Commercial Vehicle Dealer Digest, ACT Research reported that there is much to like about the current state of the U.S. economy as well as from both freight and commercial vehicle demand perspectives.
“From an economic standpoint, GDP growth is strong, consumers continue to spend at a relatively higher rate on goods and other freight-intensive sectors remain the primary drivers of economic activity,” Kenny Vieth, president and senior analyst at ACT Research, said. “This leads to the view we have from our freight-perspective glasses: Spot freight rates continue to post new record levels and are currently inverted above contract rates, a clear signal that contract rates will continue to rise. Additionally, low business inventories and backed-up ports on both coasts have created a backlog of freight, providing excellent forward visibility of ongoing strong demand for freight services.”
Vieth elaborated about how these two considerations impact commercial vehicle demand, “Combining record levels of freight demand with the constrained ability to bring supply to bear, carrier profitability is projected to rise to record levels in the coming quarters, and as we’ve often opined, fleets buy, or at least order, equipment when they are making money. Orders for medium-duty trucks, heavy-duty tractors and trailers remain elevated, and with demand hot and production constrained, backlogs are extended beyond traditional ranges.”
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