ACT points to continued improvement in Class 8 demand in coming years

Data published by ACT Research, a provider of data and analysis for trucks and other commercial vehicles, suggests that various factors are contributing to what could be a strong outlook for commercial vehicle demand in over the next few years.

By ·

Data published by ACT Research, a provider of data and analysis for trucks and other commercial vehicles, suggests that various factors are contributing to what could be a strong outlook for commercial vehicle demand in over the next few years.

Among the positive signs ACT points to for future demand include displays of stability and growth in freight-related segments of the economy as well as strong financial performances from publicly-traded carriers.

And according to ACT’s release of its ACT North American Commercial Vehicle Outlook, the firm said it projects full-year 2010 production of Class 8 vehicles to come in at roughly 152,000 units, representing a 29 percent annual gain, but still below normal replacement demand. ACT added that demand will head north in the next two years, with 2012 production moving past 300,000 units, and it also said that weak trailer growth will be on the mend with trailer production expected to hit annual growth rates of more than 50 percent in 2010 and 2011.

“Our forecasts for both 2010 and 2011 have stayed in a narrow range for the past fifteen months as our model predicted a slow economic recovery and deferred investment would create a strong replacement cycle as we moved into 2011,” said Kenny Vieth, president and senior analyst with ACT Research, in a statement. “While headwinds make a full-blown economic recovery unlikely before 2012, recent trends in the transportation and commercial vehicle markets point toward demand for new vehicles building throughout 2011 and 2012.”

Prior to this report, ACT recently published preliminary data on net orders for heavy-duty Class 8 vehicles in North American markets hitting 26,300 units. This estimate, according to ACT, confirms the forecast it has had for the last year, indicating that 2011 would see a healthy year in terms of Class 8 production.

Vieth told LM in a recent interview that based on ACT’s modeling and anecdotal evidence from truckers, it seems like the supply-demand imbalance, which has been tilted away from truckers for the last four years, has gone back to truckers, and it is not abating.

“The economic data continues to be positive and publicly traded carriers continue to see good margins,” said Vieth. “There was a flattening in freight, but profitability held up well and comes to our notion of supply and demand equilibrium between trucks and freight/shippers having swung back into truckers’ favor and truckers should continue to make money.”

Another driver, stated Vieth, is that fleets are aging, with many fleet owners having deferred capital investment—or maintenance costs—for three or four years and have been doing the bare minimum when it comes to putting sufficient levels of capital expenditures into fleets.

“They are now waking up and seeing trucks are costing a lot more to operate and seeing the need to get more trucks,” he said.

While net orders for Class 8 trucks has gone up in recent months from about 16,000 in September to 19,000 in October to more than 26,000 in November, ACT’s average monthly replacement number for North American Class 8 vehicles is around 17,000-to-18,000 trucks per month, with the U.S. number around 15,000.

“These new orders are higher, and you have to go back to the summer when order volumes were weak…when you apply seasonality to them, they were not too far off from the second quarter. We have heard that there were some incentives in the marketplace, and all the OEMs announced 2011 price increases, too. It was a kind of ‘get it while getting is good sale’ in November in terms of placing orders for early in 2011 and going from 16,000 to 19,000 to 26,000 is attributable to some announced pricing increases early in the new year.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Leveraging Florida Ports to Expand Two-Way Trade with Asia
Florida’s geography is convenient to global markets and serves as the perfect conduit for Asia-focused container trade. Florida Ports, seaport white papers, Benefits of using florida ports
Download Today!
From the April 2018 Logistics Management Magazine
As companies continue to search for the next generation of logistics management talent, the existing workforce is being asked to deliver more than ever before. While our survey respondents aren’t griping about the workload, they maintain that new challenges require more resources.
LM Viewpoint: 2018 Salary Survey, delivering more than ever
Smoother execution through S&OP
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Reshaping the Restaurant Supply Chain in the Digital Age
Get an inside look at how a leading restaurant group Bloomin’ Brands Inc (BBI), coordinates its complex supply chain to deliver an exceptional restaurant experience at the lowest cost to serve.
Register Today!
EDITORS' PICKS
34th Annual Salary Survey: Salary growth slows, tasks soar
As companies continue to search for the next generation of logistics management talent, the existing...
Evolution of E-commerce: The possibilities of tomorrow
We know e-commerce is reshaping logistics, but what are the technologies savvy managers can leverage...

State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...