According to some of the latest numbers from ACT Research, there are some positive and negative factors equally impacting the overall freight outlook. Let’s start with the not so great points presented through their research:
- Interest rates are up and this trend is expected to continue due to the ongoing impact of inflation
- The consumer goods spending binge has drawn to a close meaning less financial earnings for the majority of the industry
- The shortages and supply chain restraints continue to persist
None of these points probably came as a shock to you. Talk about industry-wide shortages and inflation has been consistent and on-going for quite some time. Drivers, technicians, parts, and trucks are all in high demand right now and these negative factors only exacerbate the hardships of today’s slowed down expediting process. However, there is a light at the end of the tunnel – let’s turn our attention towards the more uplifting side of things and focus on the good news:
- Demand in the North American market is ample and continued to persist through these trying times
- Unemployment rates are low and the industry is situated in a good position regarding the job market and where it stands today
- Companies are making money not losing it – this is represented in the strong consumer and business balance sheets especially as we make our way into the holiday season
Supply and demand, a back-and-forth dynamic impacting the state of the industry, continues to hinder vehicle production. Not being able to make as many new vehicles as customers are demanding has slowed the flow of trades in the secondary market and has limited the supply of used equipment
Speaking of used vehicles, they are consequently still in high demand. Because of this, prices are continuing to shoot through the roof. This is a problem with expected persistence due to OEM inability to produce enough vehicles to keep up with the demand.
Regarding order boards for equipment and trucks, they are full and have been for quite some time. Adamantly maintained orders is the trend being seen as cancellations hit miniscule numbers by historical standards.
So what does this mean going forward?
According to ACT, you should expect the pent-up demand to continue into next year along with late pre-buying. Tailwinds from infrastructure should additionally ease the manufacturing decline.
When it comes to Class 8 truck sales, demand continues to lag as due to slower freight markets and lack of inventory. Because of this, miles and age continue to subtly increase. Prices, however, are on the back side of the wave – sales prices are slowly starting to decline which will make it easier for customers looking to obtain new and used trucks.
Customers are beginning to see progress in the world of medium-duty sales. This is because inventory has begun drifting higher as sales trends decline.
With weaker orders and a moderate level of cancellations, the trailer market continues to stay strong with 2023 orderboards already full and seasonal backlogs well into the year. Depending on the state of the supply chain, an uptick is expected through the end of the year.
