As the the U.S. economy continues to improve, despite setbacks and increasing COVID cases across the country, both factors are increasingly impacting engine and commercial vehicle demand, ACT Research and Rhein Associates noted in this month N.A. Commercial Vehicle On-Highway Engine Outlook report.
“This year started with a whimper, and in spite of the pandemic pause in Q2, is going out with a bang,” says Kenny Vieth, president and senior analyst, ACT Research. “The trucking industry has rebounded strongly, with spot freight rates at record highs and increased new truck order intake leading to raised 2020 industry outlooks for the medium and heavy-duty segments. More home deliveries because of COVID are further influencing the trucking industry, amplifying the shift to reduced-distance routes and increasing last mile deliveries.”
The result is a new truck order business that is booming, hitting near all-time highs last month.
Click to enlarge“Comparing October’s order rate to 12-month order totals generates some impressive comparisons and highlights the across-the-board order surge that began in September. Additionally, on a preliminary basis, November orders are at or above recent levels,” says Vieth, “An ACT-favorite axiom is, ‘Fleets buy equipment when they make money,’ and truckers are going to make a lot of money in 2021.”
He adds, “A strong freight pipeline and structural and regulatory challenges surrounding driver recruiting suggest an unprecedented level of intractability in the supply-demand balance. Barring an exogenous event, the data suggest strong carrier profits are likely to extend through 2021 and well into 2022.”
Adds Andrew Wrobel, senior powertrain analyst, Rhein Associates, “On the regulation side, California’s Governor issued an executive order to require new passenger vehicle sales be zero-emission by 2035. For commercial vehicles, drayage trucks will follow the 2035 timeframe, while medium and heavy trucks will need to be zero emissions by 2045. The order also requires state agencies to accelerate development of affordable fueling and charging options.”
Additionally, when asked about alternative fuels, Wrobel says, “The outlook for natural gas powered Class 8 vehicles shows limited growth from today’s low market share levels, and despite the current pandemic, electric vehicle product development and new introductions continue. That said, each alternative fuel has its place.”
Wrobel says truck fleets remain the primary users of natural gas engines, with refuse the leading vocational application, while medium-duty applications are identified as a primary adopting group of electric commercial vehicles because of their urban applications, with limited daily mileage and most returning to base overnight for easier recharge. School buses are also good candidates for alternative fuels, from propane to natural gas to electric, he says.
