April 25, 2019

Economy continues to cool, but danger of full freight recession dims, ACT says

Conditions warrant caution through 2020 for commercial vehicle dealers, analyst writes.

By DC Velocity Staff

Economic trends in the transportation market show that growth in 2019 is continuing to slow down from last year's vigorous pace, but economists are backing off their earlier concerns about a looming recession, a recent report shows.

"While slower growth is expected, the danger signals that were flashing at the start of the year have largely moderated, no longer signaling imminent danger," ACT Research, a Columbus, Ind.-based analyst and forecasting firm, said in its latest "Commercial Vehicle Dealer Digest." The monthly report covers transportation trends, equipment markets, and forecasts for U.S. and Canada heavy duty and medium duty retail sales.

That outlook mirrors a recent analysis by load board operator DAT Solutions that the U.S. freight market will recede in 2019 and 2020 from record highs, but will likely not dip into negative territory.

"As we have been discussing for a few months now, we don't anticipate an economy-wide recession this year, but freight-related data points have been sufficiently bad in breadth and duration for us to note a low probability for a freight recession and a significant chance for a rate recession in 2019," Kenny Vieth, ACT's president and senior analyst, said in the report.

"That said, heavy commercial vehicle markets continue to benefit from key triggers, including still-strong freight rates (currently being marked down from record levels) and new technologies, like better fuel efficiency and safety technologies, as well as increased demand generated in the trailer segment for drop-and-hook to keep drivers moving," Vieth said. "Nonetheless, we remain heedful that conditions warrant caution into the end of this year and the beginning of 2020."

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