Commercial Vehicle Supply Constraints/Inflationary Ramifications Remain Front and Center

According to ACT Research’s recently released Transportation Digest, the front-and-center concerns of the commercial vehicle industry at the moment are supply chain constraints and the inflationary ramifications that flow from them.

“In addition to the front-and-center supply chain constraints, ACT also remains focused on key industry demand drivers,” Kenny Vieth, president and senior analyst at ACT Research, said. “The Cass Shipments Index has been on an upward track for almost a year and a half, which is no surprise given the shift in consumer spending from services to goods during the pandemic. The nationwide focus on the supply chain in the business press and the general media is unprecedented. And most of the links in supply chain nodes, from ports to factories to distribution centers to retailers and households, are trucks and trailers.”

In discussing the demand-side factors, Vieth said, “Spot freight rates for dry vans, flatbeds and reefers reached highs in September. Higher diesel prices enhance the value proposition of today’s fuel-efficient new trucks, as fuel savings translate into bigger ROI numbers, especially for long-distance hauls.”

On the driver side, Vieth said, “The driver shortage is a perennial issue for fleets and operators. Current ultra-tight labor market conditions have fleets competing fiercely for drivers. Offering a new truck spec’d with state-of-the-art technology for driver safety, ease and comfort is a factor that helps driver recruitment and retention.”

When it comes to forecasts from ACT Research, Vieth said, “Reviewing forecast risks, the two most visible and worrisome unknowns in the near term are 1) ongoing supply challenges for OEMs and suppliers impacting industry production and 2) the threat posed by COVID, especially if holiday gatherings are a catalyst for another wave. We also note rising risks in China, from the financial risks of over-leveraged real estate to rolling power outages to geopolitical issues like environmental policy and increasing tensions with Taiwan.”

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