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Economy and CV Markets Recovering, Path Forward Will Be Choppy, ACT Research

July 28, 2020, 07:00 AM
Filed Under: Trucking

In the release of its Commercial Vehicle Dealer Digest, ACT Research reported that the impact of more people and politicians taking the threat of the virus more seriously is a choppy economic path forward.

In recognition of the virus’ impact, ACT Research has created an easily accessible COVID-19 MARKET WATCH webpage to track noteworthy high frequency macroeconomic and transportation-specific market indicators, which can be found by clicking here.

The report, which combines ACT’s proprietary data analysis from a wide variety of industry sources, paints a comprehensive picture of trends impacting transportation and commercial vehicle markets. This monthly report includes a relevant but high-level forecast summary, complete with transportation insights for use by commercial vehicle dealer executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the total US trailer market, used truck sales information, and a review of the US macro economy.

“As the virus flared in the weeks following Memorial Day, and exacerbated by the Fourth of July, segments of the economy will be turned off and back on as the authorities work to contain the widening spread of the disease,” said Kenny Vieth, ACT’s President and Senior Analyst. He continued, “While we do not believe state-level closures are likely from here, we note that the raging case counts in major Sunbelt states raise the risk of major supply-chain disruptions, if any of those states are shuttered for several weeks.”

Specifically regarding how the CV industry is doing, Vieth commented, “Even as the economy struggles to regain its footing post-COVID and pre-vaccine, freight markets should be somewhat less impacted.” He elaborated, “While we can choose not to go to restaurants, not eating is not an option, and to that end, we are reminded of Alan Greenspan’s research that freight volumes on a per capita basis change very little over time. Most freight is related to society’s most basic needs: food, shelter, clothes, transportation.”

Vieth further explained, “With the OEMs, and subsequently the supply base, pushing hard to restore material and assembly flows, underlying economics do not appear to be as punitive as initially estimated. Additionally, spot freight rates, sitting at the intersection of equipment supply and freight demand, are the leading indicator of heavy commercial vehicle demand cycles, and the sustained rally in spot rates is one consideration leading us to make the case for a steady Class 8 market into the end of 2020.”

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