ANALYSIS: “Freight Growth Stagnating” While Class 8 Population Is Accelerating
Columbus, Indiana – ACT Research reports preliminary used Class 8 volumes (same dealer sales) jumped 25% month-over-month in March, following a modest decline in February.
However, the report indicated that longer-term comparisons yielded a 14% decline compared to March 2018.
Other data released in ACT’s preliminary report included year-over-year comparisons for March 2019, which showed that average prices rose 7%, while average miles contracted 2%, and average age was 8% higher.
According to Steve Tam, Vice President at ACT Research, “We continue to hear from dealers that the lack of inventory is a limiting factor inhibiting sales volumes, an observation corroborated by the current demand and pricing environment. Despite the impressive sequential increase, volumes remain well below last year’s year-to-date level.”
He continued, “It is important to note that slowing growth in the freight market is also a likely contributor to the lower sales. Truckers may be getting to the point where they have the trucks necessary to meet their needed freight demand.”
New Truck Sales Meet Analyst’s Expectations
According to ACT Research’s (ACT) latest State of the Industry: Classes 5-8 Report, March’s Class 8 metrics generally aligned with expectations, with the lone exception of cancellations, which continued to trend lower.
“Data continue to tell the same stories we have been reporting. First and foremost, the story remains one of current demand strength: Public truckload carriers’ profitability in Q4 shattered records, and while freight data metrics are fading, the fade is from best-ever levels,” said Kenny Vieth, ACT Research’s President and Senior Analyst.
He added, “The second story starts with those softening freight metrics, pivots on robust build and sales, and ends with the reality of a record new Class 8 inventory. In short, freight growth is stagnating, even as Class 8 population growth is accelerating.”
The report indicated that this is a supply-demand story that typically does not end well.
Regarding the medium duty markets, Vieth commented, “Medium duty metrics generally aligned with expectations in March, as well, but the front-end was soft, with orders dropping to a nine-month actual, and 20-month low volume on a seasonally adjusted basis. We believe the order slowdown was both attributable to very large backlogs as well as slowing activity in the construction and auto markets.”