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ACT Research: CV Industry Showing Caution Flags, Still Much to Like

April 18, 2022, 07:03 AM
Filed Under: Trucking

According to ACT Research’s latest release of the North American Commercial Vehicle OUTLOOK, for the first time since the second quarter 2020 transportation metrics stopped moving “up and to the right” in Q1 2022.

According to Kenny Vieth, ACT’s President and Senior Analyst, “While a mid-2022 deceleration in freight activity and rates has long been anticipated in ACT’s freight market research and the timing of the turn was as anticipated, the magnitude of the correction was considerably larger than expected.”

He continued, “Early April data suggest rate moderation continued. Other transportation metrics, like load/truck ratios and load turndowns, also fell sharply in March, moving from tight to neutral levels and reinforcing the weakness exhibited in spot rates.” Vieth added, “While March was clearly an inflection point, and the economy is downshifting from its frothy 2021 pace, it is not clear to us that March was the inflection point.”

Vieth noted, “Recognizing the uptick in caution flags, there is still much to like about the current situation. Carrier profitability, pent-up demand, and prebuying remain large forces that should propel the industry into the end of 2023. And, while the risk of stagflation has grown, part of the ‘-flation’ is a wicked-hot U.S. (and Canadian) job market. As well, and unlike say, 2007, consumer debt service as a percentage of disposable income is running well below the record levels of the pre-Great Recession period, and corporate profits are at all-time highs, so there is greater capacity economy-wide to absorb shocks.”

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