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The challenges facing strong Class 8 demand

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Jason Morgan is the content director of Fleet Equipment. He has more than 15 years of B2B journalism experience covering the likes of trucking and construction equipment, real estate, movies and craft beer industries.

They are numerous. According to ACT Research’s recently released Transportation Digest, supply-chain difficulties, COVID, inflation, high energy prices, robust freight and rates, and public policy continue to be the dominant issues shaping the heavy-duty outlook.

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“Class 8 demand remains strong, but the ability of manufacturers to respond to that demand continues to be constrained,” said Kenny Vieth, ACT’s president and senior analyst. “Higher prices are the inevitable result, and that will remain the case through much of 2022. We believe these conditions will gradually be alleviated, but risks will be higher than usual for a wide set of possible outcomes around our base case.” Vieth further noted, “Freight market equilibrium, the supply-demand balance between equipment and drivers and freight volumes, probably won’t be achieved until the fourth quarter of next year.”

About the impact of COVID variants in particular on ACT’s commercial vehicle forecasts, he explained:

“The single most important new development impacting, and adding risk to, the near-term heavy-duty forecast has been the global spread of the new COVID Omicron variant. As important as the disease itself is the reaction of civil authorities and the public-at-large to Omicron – as well as to future variants that may crop up in 2022 and beyond. We can hope that lessons learned from the experience of the last two years would at least aid with directional guidance, on a macro and micro basis.

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“For our forecasts,” he continued, “one lesson is that demand for goods holds up fairly well during a pandemic compared to services, especially if those services are public-facing. Sectors closely associated with activity in goods production and distribution (manufacturing, construction, mining, agriculture, wholesale and retail) are transportation-intensive, and generally trucking-intensive. So by its very nature, demand for heavy trucks has a natural, in-built COVID immunity.”

The report, which combines proprietary ACT data and analysis from a wide variety of sources, paints a comprehensive picture of trends impacting transportation and commercial vehicle markets. This monthly report is designed as a quick look at transportation insights for use by fleet and trucking executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the US trailer market, used truck sales information, and an overview of the US macro economy.

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More 2022 outlook thoughts from Kenny

Just before the end of 2021, I caught up with Vieth for our budding annual industry year that was and year that will be video interview. You can watch that below.

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