The global spread of the COVID-19 strain of the coronavirus has required ACT Research to do a foundational reassessment of near-term economic expectations, and by extension, North American commercial vehicle demand, the firm has shared.
“Starting in the second half of February, COVID-19 went from a China containment story to one of spiraling pandemic,” said Kenny Vieth, ACT’s president and senior analyst. “And six weeks after shutting down for the Spring Festival, China is only now starting to return to work. While they weren’t working, the Chinese weren’t spending either, and as the planet’s largest consumer of commodities, China’s downturn is hitting commodity prices across the board.
“While demand-side weakness will continue to unfold, the front-and-center impact from a freight perspective presently is on the supply-side: Domestic port and rail volumes have just begun to reflect the drop in Chinese output,” he continued. “Being a supplier of intermediate and finished goods, there are major implications for a number of freight-intensive economic sectors, and we are just on the cusp of feeling that pinch.”
Regarding NA commercial vehicle demand, Vieth said, “COVID-19 has undermined expectations across the board in 2020. Starting with lower expectations for economic output, medium-duty, heavy-duty and trailer forecasts have all been trimmed to reflect the drop in economic activity. Beyond substantive changes in the immediate near-term, our longer-term assumptions are unchanged presently, with expectations that markets will recover to trend starting in 2022.”