ACT Research: Strong Freight Rates Mean Strong New Commercial Vehicle Demand

In the release of its Commercial Vehicle Dealer Digest, ACT Research reported that the strength in new commercial vehicle demand can be summed with strength in freight rates.

The report, which combines ACT’s proprietary data analysis from a wide variety of industry sources, paints a comprehensive picture of trends impacting transportation and commercial vehicle markets. This monthly report includes a relevant but high-level forecast summary, complete with transportation insights for use by commercial vehicle dealer executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the total US trailer market, used truck sales information, and a review of the US macro economy.

“Despite, or arguably because of, the pandemic-related pause in Q2, commercial vehicle demand is heading into 2021 with a bang, resulting from consumer and business spending substitution from services to goods, inventory rebuilding, and the sidelining of drivers, just to mention a few,” said Kenny Vieth, ACT’s President and Senior Analyst. He continued, “An ACT-favorite axiom is ‘fleets buy equipment when they make money,’ and as illustrated in ACT’s aggregation of DAT’s rate data, truckers made money in 2020 and are going to make a lot of money in 2021.”

CV DD Graphic 12-22-20

Vieth elaborated, “Since August and through November, spot freight rates have been at record levels and continued to rise in early December. For only the second time in history, spot and contract rates are inverted, with contract rates following spot rates by around five months, this suggests accelerating fleet profitability into 2021.”

Used 12.23.20

He concluded, “A strong freight pipeline and structural and regulatory challenges surrounding driver recruiting suggest an unprecedented level of intractability in the supply-demand balance. Barring an exogenous event, the data suggest strong carrier profits are likely to extend through 2021 and well into 2022. The situation bodes well for new commercial vehicle demand.”

ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.

ACT’s 64th Seminar is scheduled for February 23-25, 2021. Focused on the continuous evolution and advancement of power and energy changes in the transportation and commercial vehicle markets, OUTLOOK Seminar 64 will feature key industry leaders such as Ryan Reed of Wabash National, John Bennett from Meritor, Lance Riegel of Marvin Johnson, and Dominick Beckman from Hino Motors. Look for more details on this event over the coming months and save the date for February’s event. Click here for seminar information. 

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