COLUMBUS, Ind. — Except for trailers, changes to medium duty and Class 8 forecasts this month were small, as published in the latest release of the North American Commercial Vehicle OUTLOOK from ACT Research.
“The trailer forecast receives a more substantive haircut this month, driven primarily by Class 8 overcapacity persisting longer in 2024, weighing heavily on carrier profitability in a period where carriers are more likely to continue spending on Class 8 units due to an expensive EPA mandate landing in 2027,” according to Kenny Vieth, ACT’s president and senior analyst.
Vieth said there is a historically strong relationship between carrier profits and vehicle demand.
“Once a quarter, we get to look at the publicly traded truckload carriers’ financial performance,” he noted. “The opening stanza of 2024 was notably bad for the very good carriers who make up the group.”
In Q1, profit margins collapsed to a 14-year low 2.6% (3.0% seasonally adjusted), according to the report.
While the profitability drop was in part seasonal, tractor capacity additions through 2023’s freight recession, and into 2024, have left carriers contending with below-operating-cost spot freight rates in an overcapacitized market. This, in turn, is holding down the group’s ability to boost contact rates, and thereby, profits, Vieth said.
“We revisited our trailer forecasts based on these near-term considerations: carrier profits, overstocked trailer dealer inventories that are proving hard to move, a short and soft peak order season and increasingly diminished backlogs,” Vieth concluded.
Born in Pine Bluff, Arkansas, and raised in East Texas, John Worthen returned to his home state to attend college in 1998 and decided to make his life in The Natural State. Worthen is a 20-year veteran of the journalism industry and has covered just about every topic there is. He has a passion for writing and telling stories. He has worked as a beat reporter and bureau chief for a statewide newspaper and as managing editor of a regional newspaper in Arkansas. Additionally, Worthen has been a prolific freelance journalist for two decades, and has been published in several travel magazines and on travel websites.
