ACT Research wrote in its recent State of the Industry: North American Classes 5-8 report that it projects the U.S. economy to expand by 1.8 percent in 2020.
“The risk of an economy-wide recession that was a growing concern through Q3 [in] 2019 has largely faded, with healthy consumer fundamentals expected to provide sufficient momentum to get through the slow patch in industrial activity,” says Kenny Vieth, ACT Research president and senior analyst. “That said, the manufacturing recession continues, and the supply-demand imbalance between trucks and freight currently weighing on carrier profitability is likely to extend deep into 2020.”
Looking in the Class 8 market, Vieth says 2019 was the second-best year in history for Class 8 production, trailing only the EPA’07 pre-buy driven volumes of 2006.
“While a downturn is expected this year, the silver living is that the expected production decline in 2020 will pale compared to the 42 percent drop recorded in 2007,” he says.
Vieth says last year was equally dominant for the medium-duty market.
“Choosing not to do a 50-year lookback, we are calling 2019 the new record year for medium-duty vehicle production, eclipsing the previous record set in 1999. And although the cycle is shallower, it isn’t so different from the heavy-duty experience over the course of last year, including lower orders, inventory building and a sharp decline in backlogs that will constrain the industry in 2020,” he says.
Trailer order downswing confirmed
ACT Research also announced this week its final trailer order total for December 2019 was 18,400 units, down 13 percent month over month. Accounting for cancellations, that number slipped further to 17,700 units. Longer-term comparisons show net orders down 35 percent year over year and 51 percent lower compared to full-year 2018.
“While seven of the ten major trailer categories posted month-over-month gains, the sequential 32 percent drop in dry van orders was significant enough to pull the total industry results into the red,” says Frank Maly, director, commercial vehicle transportation analysis and research. “Continued softness in both freight volumes and rates are generating financial headwinds for fleets, and as a result, their investment plans continue to be extremely cautious.”
