New numbers from ACT Research show strength of both freight demand and heavy vehicle demand, the company shared.
According to Kenny Vieth, ACT’s president and senior analyst, two charts seen above from ACT’s North American Commercial Vehicle Outlook show promising numbers. “The Total Business Inventory-to-Sales ratio bounced off the bottom in May, but remained well below the recent range in this era of multiple sales channels, showing that at May’s sales rate, it would take $150 billion of inventory accumulation to bring the ratio to the low end of its recent range, and suggesting a good pipeline for freight,” Vieth said. “Add to that the steamships that are piling up on both coasts and there is a strong case to be made for continued strength in freight activity into the end of the year and beyond.
“The second chart shows the just-completed accounting of the publicly traded truckload carriers’ performance in Q2 of 2021,” he continued. “With the freight pipeline filled, the commercial vehicle industry unable to accelerate vehicle production, and seasonal considerations, fleet profitability should continue rising into year’s end and start 2022 on a very strong footing. While our first chart serves as a proxy for strong freight demand, the relationship between carrier profits and heavy vehicle demand are both obvious and irrefutable. The questions that remain are the speed at which fleets overcome driver capacity constraints and the speed at which vehicle production rises once current supply-chain constraints are overcome.
“Medium-duty, heavy-duty and trailer backlogs are essentially filled through 2021 and well into 2022, with BL/BU ratios well above traditional ranges and inventories below traditional thresholds,” he added. “As has been the case since the start of the year, supply-chain constraints, rather than fleet/consumer demand, are the primary driver of how many vehicles will be produced in 2021.”