November trucking industry economic forecast shows slight uptick

COLUMBUS, Ind. — Eased supply chain constraints make November’s trucking industry economic forecast slightly better than October, according to ACT Research’s latest version of North American Commercial Vehicle OUTLOOK, 2022.

ACT Research said if inflation remains elevated, the Fed will continue its aggressive response, raising the odds of a steeper decline in economic activity.

Looking to 2023, Class 8 forecast is unchanged, while Classes 5-7 reflect more of an increase in demand, according to ACT

“Our forecast for 2023 belies current economic activity,” said Kenny Vieth, president and principal analyst at ACT. “Using Class 8 as an example, record orders in September followed by robust preliminary orders in October, large order books, a string of record cancellation months and an easing of supply chain constraints, all indicates continued strength through 2023.”

Vieth said the maxim is “don’t fight the Fed,” adding that the longer inflation stays high, the more aggressively the Fed will respond with higher interest rates.

“This, in turn, increases the chances of a steeper decline in economic activity, and translates into fewer commercial vehicles needed to facilitate this lower level of activity, and will likely exacerbate downward pressure on spot and contract rates, which will negatively impact the profitability of carriers,” Viet said.

Vieth said ACT is not yet ready to pursue volumes at the very top of the ladder in 2023.

“The critical factor in the forecast for 2023 is when will falling freight volumes and rising borrowing costs squeeze carrier profits enough to kill the cycle?” Viet said. “Our current thinking is that the negatives begin to weigh on orders from 1H’23 and more significantly in the second half of 2023; however, with pre-purchases ahead of California Air Resources Board terms beginning in 2024 and given the strength of carrier profitability, there is a compelling case to be made for production volumes to be maintained at 2022 levels through 2022. ‘at the end of 2023.

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