Kenny Vieth of ACT Research speaks Tuesday at the TRALA Annual Meeting in Bonita Springs, Fla.Internal and external factors show reasons for optimism for the commercial trucking industry, Kenny Vieth reported Tuesday during the Opening General Session of the 2017 Truck Renting and Leasing Association (TRALA) Annual Meeting in Bonita Springs, Fla.
Vieth, president and senior analyst at ACT Research, says the trucking industry was saddled with a “so-so” 2016 for a variety of reasons, included but not limited to weak commodity prices, overall global monetary weaknesses, excess inventories for several industries impacting trucking and an election season of uncertainty that froze business decisions.
Now a quarter into 2017, Vieth says most of those concerns have been alleviated, and both in the trucking industry and business communities at large, 2017 is shaping up to be a much stronger year.
Vieth says global manufacturing made the first step in the right direction during Q3 last year when Germany and United Kingdom began reporting above average growth trends for the first time in months. The United States followed a few months later.
At home, November’s election of Donald Trump kick started an immediate uptick in the United States’ stock market. The Dow Jones and S&P 500 both have notched all-time highs in the months since Trump’s election, and Vieth says trucking-oriented companies specifically are up 14.1 percent and 8.9 percent, respectively, across the two markets since October.
Vieth also cites rebounding industrial metals production, a positive yield spread, an increase in consumer and small business sentiment, and an expectation of eased regulatory burden under Trump’s Administration as other external positives for trucking in 2017.
Internally, Vieth says recent efforts to reduce overcapacity and stabilize truck orders are beginning to pay dividends. He says the industry has moved almost half of its excess medium- and heavy-duty inventory since peaking at 75,000 units earlier this decade. These efforts are especially crucial to the rental and lease industry, as lowering prices to move tractors weakens the value and demand for leased units.
From a sales perspective, Vieth says ACT believes the market hit its trough last summer. The strong early months of 2016 will likely allow last year to total more orders than this one—“There were more trucks sold from 2012 to 2016 than any point in history,” he says—but ACT predicts 2018 to surpass both 2016 and 2017 for the medium- and heavy-duty markets.
