In the latest release of its Commercial Vehicle Dealer Digest, ACT Research reported that supply chain constraints kept a lid on the commercial vehicle industry’s ability to raise build rates through 2021, at least until December, when a torrent of red-tagged/incomplete heavy-duty and, to a lesser extent, medium-duty units were finished.

“As supply constraints continue to dominate the conversation, broad-based economic and freight market strength is often overlooked,” Kenny Vieth, president and senior analyst of ACT Research, said. “In addition to long lead time manufacturing demand, U.S. consumers’ economic footprint has never been bigger. GDP surged 5.7% in 2021, with the forecast for growth at 3.7% in 2022, and thanks to the long period of low interest rates, consumer debt service levels are at historically low levels, while household net worth has surged since the beginning of 2020.”

Concerning the effects on the transportation industry, Vieth said, “For transportation providers, the virus continues to bend consumer spending to goods and away from services. Significant congestion in ports on both coasts is expected to linger into mid-year, and pent-up demand in the manufacturing sector is growing, related to the same supply chain woes that are impacting commercial vehicle production. Additionally, corporate profits continue their record-setting run, allowing businesses to invest in productivity-enhancing equipment. With wages growing rapidly, machinery demand is well above trend as employers drive capital for labor substitution. Even discounting for unprecedentedly low automotive inventories, consumer-facing retail inventory-to-sales ratios remain unprecedentedly low, which will support freight demand deep into 2022. Additionally, used vehicle prices are at record levels across Class 8 age and mileage nodes, and data indicate record valuations for medium-duty and trailer assets. Healthy consumer and corporate balance sheets and pent-up inventory demand translate into continued robust freight markets and still-rising freight rates (to date).”