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Home » Class 8 truck demand teeters on cusp of "significant correction," ACT says
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Class 8 truck demand teeters on cusp of "significant correction," ACT says

July 29, 2019
DC Velocity Staff
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Demand for orders of new commercial vehicles is faltering fast after a strong 2018, leading an industry report to warn that the Class 8 market is "on the cusp of a significant correction," according to ACT Research Co.

In addition to weakening demand for tractor-trailers, the report found that the medium duty truck market also continued to confound in May, with forward-looking indicators deteriorating and concurrent data suggesting moderate growth.

Taken together, these trends impacting the transportation and commercial vehicle markets could even indicate a more widespread slump in the nation's gross domestic product (GDP), according to ACT, a Columbus, Ind.-based analyst and forecasting firm. ACT's recently released "Transportation Digest" said that the U.S. economy is on track to decelerate from the 2018 tax-cut-boosted vigorous growth of 2.9 percent to a real GDP forecast average of 2.4 percent this year and slightly below 2 percent in 2020.

"There is a gap between the perception that things remain A-OK in the heavy truck business on one hand and the rapid erosion of transportation fundamentals on the other," Kenny Vieth, ACT's president and senior analyst, said in a release. "This is why ACT has been warning subscribers for months about the possibility of a slowdown into the end of 2019."

The medium duty market continued to confound in May, with forward-looking indicators deteriorating and concurrent data suggesting moderate growth. #Transportation #MediumDuty #Economics #Trucking #Trailer https://t.co/C5ToXCOVVS pic.twitter.com/FX7f9Dgdhe

— ACT Research (@actresearch) July 29, 2019

The freight market looks very similar when viewed from the shipper's side of the equation, according to a July 25 report from industry consulting firm FTR.

Market conditions are the most favorable for shippers in years and are expected to continue in their current range for the remainder of 2019, according to Bloomington, Ind.-based FTR's Shippers Conditions Index (SCI). The firm's SCI for May improved sharply to a reading of 5.6, nearly four points higher than its April reading, based principally on continued softening of truckload and intermodal rates while rail rates are stabilizing.

"Softness in freight volumes combined with more abundant capacity in the truckload market than was present last year have made it a good time to be a shipper," Todd Tranausky, vice president of rail and intermodal at FTR, said in a release. "Sustained weakness in freight volumes through the summer suggest the positive results for shippers could continue for much of the rest of 2019."

FTR's Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market: freight demand, freight rates, fleet capacity, and fuel price. The individual metrics are combined into a single index number that represents good, optimistic conditions for positive scores or bad, pessimistic conditions for negative scores.

Transportation Trucking Business Management & Finance
KEYWORDS ACT Research Co. FTR
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