TheTrucker.com

Research firm: ‘Sky isn’t falling’ in transportation industry

Research firm: ‘Sky isn’t falling’ in transportation industry
ACT Research is responding to a recent op-ed piece that ran in a transportation trade publication proclaiming that "the sky is falling" in the transportation industry.

COLUMBUS, Ind. — ACT Research is responding to a recent op-ed piece that ran in a transportation trade publication proclaiming that “the sky is falling” in the transportation industry.

According to ACT officials, their staff has received many questions surrounding the issue.

“To be fair, for the first time since Q2’20 transportation metrics stopped moving ‘up and to the right’ in Q1,” said ACT President and Senior Analyst Kenny Vieth.

“While a mid-2022 deceleration in freight activity and rates has long been anticipated in ACT’s freight market research and the timing of the turn was as anticipated, the magnitude of the correction was considerably larger than expected,” he continued.

When asked why he doesn’t think the sky is falling, Vieth explained, “Recognizing the uptick in caution flags, there is still much to like about the current situation. As a result, our forecasts for 2022 and 2023 are virtually unchanged: Carrier profitability, pent-up demand and prebuying remain large forces that should propel the industry into the end of 2023. And, while the risk of stagflation has grown, part of the ‘-flation’ are hot U.S. and Canadian job markets. As well, consumer debt service as a percentage of disposable income is near trough levels and corporate profits are at all-time highs, so there is greater capacity economy-wide to absorb shocks.”

Vieth said that on the freight front, there are two points to make.

“First, carrier profits were at all-time record levels in 2021, and TL fleet contract rates are still expected to rise double digits this year,” he said.

“The second point is used vehicle prices,” he continued. “We are likely near the top, and valuations are likely to fall as freight market constraints ease, but currently used inventories are half their year-ago levels, which will cushion that decline. And, when freight volumes do roll-off, there is considerable high-priced capacity that is likely to exit the market, thereby putting a pretty high floor under freight rates.”

The Trucker recently published an article sounding some concerns about the coming months in the trucking industry; however, in that article, Vieth also sought to tamp down the “doom and gloom.”

Whether the coming months will be a “bloodbath” or a “shallow correction,” the consensus is that conditions in trucking may get a lot tougher.

How bad it gets and how long it lasts will play out in coming months.

 

 

The Trucker News Staff

The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.

Avatar for The Trucker News Staff
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.
For over 30 years, the objective of The Trucker editorial team has been to produce content focused on truck drivers that is relevant, objective and engaging. After reading this article, feel free to leave a comment about this article or the topics covered in this article for the author or the other readers to enjoy. Let them know what you think! We always enjoy hearing from our readers.

COMMENT ON THIS ARTICLE