COLUMBUS, Ind. — ACT Research’s July freight forecast and commercial vehicle outlook reports, released earlier this week, continue to reflect the impact of COVID-19 on the trucking industry, but both reports showed improvement.
According to the July installment of ACT’s Freight Forecast, a 56-page monthly report, ACT’s Spot Leading Indicator showed a 10% year-over-year increase, according to Tim Denoyer, ACT’s vice president and senior analyst. He described the increase as “a sharply positive reversal.”
The Spot Leading Indicator is a survey-based measure of the direction of rates, and the monthly Freight Forecast includes volumes and contract rates for the truckload, less-than-truckload (LTL) and intermodal sectors of the transportation industry.
“The pandemic has caused twin supply shocks in the freight market. First, the CARES Act is incentivizing the unemployed to not come back to work, creating a near-term driver shortage. And second, while there are still plenty of parked trucks at the moment, low truck production this year will tighten equipment capacity over the medium term,” Denoyer continued. “We expect this to cause a bit of back and forth in spot rates, but we see the medium-term trend moving higher on tighter supply and recovering demand.”
According to ACT’s latest release of the North American Commercial Vehicle Outlook, forecasts for 2020 were marked up across the board in July. The report credits the uptick to the impact of nearly $6 trillion in stimulus to date, better-than-expected economic activity in June, freight rates boosted by a driver shortfall that was created by massive layoffs and extended unemployment benefits, and preliminary June metrics that were well above trend.
“COVID-19 continues to impact the CV industry, as well as the US and global economies, but we do not believe state-level closures are likely from here,” said Kenny Vieth, ACT’s president and senior analyst.
“That said, the raging case counts in Sunbelt states raise the risk of supply-chain disruptions, if any of the heavily-impacted states are shuttered for several weeks, as too much July 4th weekend fun is expected to drive a case surge into the end of the month,” he continued. “A vaccine is seen as the key to unlocking a more broad-based recovery, as the simplest human interactions will no longer have to be weighed and justified.”
Vieth noted that, for the most part, the nation’s transportation industry is designed to meet the basic human needs of food, shelter, clothing and transportation.
“Even as the economy works to regain its footing post-COVID and pre-vaccine, freight markets should be somewhat less impacted because, while we can choose not to go to restaurants, not eating is not an option,” he said.
Spot rates and demand for commercial vehicles are closely related, he noted.
“Combined with the OEMs and their supply base pushing hard to restore material and assembly flows, underlying economics do not appear to be as punitive as initially estimated,” Vieth said. “Additionally, spot freight rates, sitting at the intersection of equipment supply and freight demand, are the leading indicator of heavy CV demand cycles. Because of these factors, we’re seeing stronger and sooner production increases.”
ACT’s North American Commercial Vehicle Outlook provides a complete overview of the North American markets and studies relevant, current market activity to highlight orders, production and backlogs. Information included in the report covers forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers; the macroeconomies of the U.S., Canada and Mexico; publicly traded carrier information; the impacts of oil and fuel prices; freight and intermodal considerations; and regulatory environment impacts.
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.
