The slow production rates across truck and trailer OEMs isn't getting better. And it's not solely due to semiconductors either.
In its recent Commercial Vehicle Dealer Digest, ACT Research reports the setup for the entire commercial vehicle industry remains unchanged, with industry capacity still range-bound across a broad front of supply-chain constraints.
“While the focus is on silicon and semiconductors, it is really an ‘everything’ shortage,” says Kenny Vieth, ACT Research president and senior analyst. “Those constraints are not localized CV industry specific challenges, but continue as pandemic-driven failures in a globally reliant web of interrelated supply chains. Rebuilding complex global networks requires the system to spin at roughly the same speed, which it is decidedly not doing at present.”
But Vieth also says just like heightened inflation, the current situation in North American commercial vehicle manufacturing is transient The issues impacting production will eventually pass.
“Of course, while transient implies a return to a normalized, demand driven, state of activity, the word does not imply either magnitude or duration,” he says. “Were this a traditional cycle, soaring market indicators and already massive backlogs would put us in the easiest part of the cycle to forecast as carrier profitability is at the heart of the vehicle demand equation.”
What does this mean for carriers? Vieth says business appears strong despite equipment challenges.
“The publicly traded TL carriers saw profitability land just short of best-ever profit margins in Q3, with seasonal adjustment boosting net profits to a record 8.6 percent, eclipsing the previous record set in Q1. Additionally, we tend not to view freight as a backlog business, but rather a real-time expression of economic activity. In this unusual period, an actual freight backlog argues for strong freight fundamentals well into 2022.”