ACT Research: Trucker profitability expected to roll over in 2nd half of year

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The net freight chart is illustrative of the “demand” side of the current situation. Slower freight growth, an easing of driver supply constraints, the resumption of the long-run freight productivity trend, and strong Class 8 tractor fleet growth will increasingly pressure rates and by extension, trucker profitability in 2019. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — According to ACT Research’s latest release of the North American Commercial Vehicle OUTLOOK, slower freight growth, an easing of driver supply constraints, the resumption of the long-run freight productivity trend and strong Class 8 tractor fleet growth will increasingly pressure rates and by extension, trucker profitability in 2019.

“With the industry awash in capacity, trucker profitability is expected to roll-over in earnest by the second half of 2019, as 2018 contracts expire and are replaced by lower 2019 rates,” said Kenny Vieth, ACT’s president and senior analyst. “That said, while GDP is expected to slow, the danger signals that were flashing at the start of the year have largely moderated: Near-term indicators are no longer signaling imminent danger. The in-process ratcheting-up of tariffs on Chinese goods and expected Chinese counters to U.S. actions do not appear conducive to near-term growth or confidence.”

Regarding heavy vehicle demand, Vieth said, “We continue to believe the accelerating supply-demand imbalance and large new vehicle inventories will trigger a correction sometime in the latter half of this year. Hence, we remain cautious into the end of this year and early next.” Despite Vieth’s cautious tenor, he said that the heavy commercial vehicle market continues to benefit from key supply and demand-side triggers, including a freight rate markdown that is from record highs, desirable new technologies, better fuel economy, and for trailers increased demand for drop-and-hook to keep drivers moving.

ACT Research is a publisher of commercial vehicle truck, trailer and bus industry data, market analysis and forecasting services for the North American and China markets.

For more information, visit www.actresearch.net.

 

 

 

 

 

 

 

 

 

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