Except for Class 8, trailer and Classes 4-7 forecasts were largely unchanged, as published in the latest release of the North American Commercial Vehicle OUTLOOK.
“Not only did April build not slow in the face of tough freight fundamentals, falling backlogs, and near-record inventories, production of Class 8 vehicles came in well ahead of expectations. Still strong production and an upwards adjustment to our inventory-carrying assumptions, boosts 2024 output while reducing 2025,” according to Kenny Vieth, ACT Research’s President and Senior Analyst.
“The uptick in 2024 expectations into worsening conditions is a coin toss: We may miss the timing, but shallower sooner or deeper later appear to the options,” he added. “Class 8 overcapacity persisting longer in 2024 and weighing more heavily on carrier profitability is not just a risk to Class 8, but also to the trailer forecast. If current market demand reflects EPA’27 prebuying, that prebuying comes at the expense of better freight rates sooner. While over-the-road carriers are under considerable pressure, we would be remiss not to note that vocational truck markets are in better shape than tractor markets, though even here, inventories are getting extended.”
There are still several pockets of strength in the Class 8 market, but:
- for-hire carrier profits are at levels not seen since 2010;
- deep into the bottom of the cycle, there has been no capacity rationalization to date, only additions;
- capacity expansion has left freight rates at recessionary levels, continuing to prolong the downturn; and,
- while still expanding, the pace of the economy’s recovery is running at about half the 4 percent-plus GDP rate of 2H’23.