ACT Research: Supply and Demand-Side Triggers Impacting Heavy CV Markets

ACT Research noted, in the release of its Commercial Vehicle Dealer Digest, that heavy commercial vehicle markets continue to benefit from a broad spectrum of supply and demand-side triggers. Those triggers include still strong US and Canadian freight markets, ELD capacity absorption, which exacerbated an already-tight driver supply, higher rates and margins for fleets, increased demand for drop-and-hook services to keep drivers moving, and new technologies that weren’t available or weren’t being ordered three to four years ago. The report provides monthly analysis on transportation trends, equipment markets, and the economy.

“Orders continued at highs levels for both Class 8 and trailers in October,” said Kenny Vieth, ACT’s president and senior analyst. “While November’s preliminary Class 8 orders were the weakest in 16 months, orders occurring at a 328k SAAR were still above the industry’s ability to produce. Besides, the backlog is over 300,000 units and the backlog-to-build ratio is around 10.5 months, so a slowdown in orders is the most likely go-forward path.”

Additionally, Vieth said, “While the supply-demand balance for fleets is softening at the margins, demand for heavy commercial vehicles remains strong, and upside pressures on 2019 output are considerable, given big orders and bigger backlogs. Trucker profits expected to be at or near record levels next year, continued growth in overall economic activity, and capacity constraining the driver supply are currently supporting demand into the new year. Anecdotes and recent data suggest some easing in the driver supply.”

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