In a release of its Commercial Vehicle Dealer Digest, ACT Research reported that the freight-generating sectors of the economy are strong, freight rates are at record levels and commercial vehicle demand is hot. However, ACT Research also reported that supply-chain constraints are restraining 2021 expectations.
“With orders remaining hot through February reporting from ACT, backlogs and backlog-to-build ratios continuing to rise, and new vehicle inventories tight, the problem isn’t demand but supply, as the new vehicle demand story remains unchanged,” Kenny Vieth, president and senior analyst for ACT Research, said. “The supply chain’s ability to respond to demand will be the critical determinant of commercial vehicle production in 2021. To no small extent, it appears that the more traditional early-cycle ramping pains (tires, assorted cast parts, wiring harnesses) are taking a backseat to more cycle-specific constraints, which begin with the simultaneous global ramp in economic activity overlaid with pandemic-specific challenges.
“Pushing commercial vehicle demand forward, freight rates ended February at record levels (seasonally adjusted) and started March on an upswing. With the nation’s ports backed up for months, commodity prices soaring, the manufacturing sector heating and the housing market already in full swing, there is unparalleled visibility to strong freight flows. Freight is not typically a backlog business, but that is clearly not the case today.”
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