2021 Likely to be Transition Year for Trucking Industry

According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, 2021 is being forecast as the transition year, as the global economies and North American commercial vehicle demand move from COVID-19’s negative impacts into a meaningfully better situation in 2022.

Read more: Manufacturers Report First Quarter 2020 Negatively Impacted by COVID-19

“Without clear forward visibility on the COVID-19 endgame, the crystal ball is particularly opaque, as the economy begins to re-emerge from its medically-induced coma,” says Kenny Vieth, ACT’s President and Senior Analyst. He elaborates, “Even as we work through the logic and implications of bigger picture issues, more practical considerations for 2021 forecasts arise.”

Vieth adds, “History shows that even from the lowest lows, the manufacturers can’t snap their collective fingers and bring production up immediately. Returning to normalized production levels is a process that is hard to rush.”

He continues, “Coupling an otherwise structurally sound pre-COVID economy, with strong governmental support and rising pent-up demand, there is a case for the economy to rebound into 2021. We believe maturing millennials will be the key to pushing the economy forward as they resume their transition to marriages, kids, and mortgages.”

Regarding NA commercial vehicle demand, Vieth comments, “Underlying fundamentals for the medium-duty market took a direct hit from COVID-19, as it impacted the consumer portion of the economy severely. The heavy Class 8 and trailer markets are seeing falling orders, rising cancellations, and backlogs getting pushed to later build dates. When the economy ultimately rebounds, accessible capacity is likely to be short, leading to strong rebounds in freight rates, carrier profitability, and ultimately unsated vehicle replacement demand.”

Read more: North American Class 8 Orders Plunge to Lowest Level in Modern Era