According to ACT Research’s (ACT) latest State of the Industry: NA Classes 5-8 Report, lagging Russia’s invasion of Ukraine by about one month, some freight-related metrics looked increasingly tired in March and early April, but there’s more to the story.

According to Kenny Vieth, ACT Research’s President and Senior Analyst, “Moderating spot rates and falling load turndown data suggest that the relationship between demand and supply are becoming more equally balanced, as freight growth slows and driver capacity growth persists.” He continued, “While we acknowledge the roll-off from peak activity, some of the giveback that began in March was the return of labor on diminishing Omicron COVID case counts: Much of the 10 percent spot rate decline tracks rates to pre-Omicron levels.”

Vieth added, “The move to negative metrics was met with some press hysterics, but a more holistic view of the market shows still strong and wide economic underpinnings, from corporate earnings to industrial metrics to consumer balance sheets. And, the inflation-driven slowdown that is occurring is happening in a market where pent-up demand is the rule.” He concluded, “To that end, the economy remains a secondary risk to expectations. The greater risks to the downside through the balance of 2022 and into 2023 remain ones of supply, with Ukrainian neon and Chinese zero-COVID lockdowns at the top of the list of causes that could push vehicle output below expectations.”

Regarding commercial vehicle segment production, Vieth commented, “North American commercial vehicle markets continue to perform at status quo levels: Supply-chain constraints continue to impact the industry’s ability to raise production levels toward demand. As a result, backlogs remain long, and order volumes remain constrained due to ‘within 12 months’ order reporting ground rules. Until build rates find additional traction, orders will largely mirror production levels.”