|Date Published||August 22, 2014|
The presentation will answer questions relating to where we are in the commercial vehicle demand cycle and how ACT expects production to unfold over the course of 2014 and into 2015. On the heels of strengthening trucking fundamentals, new orders for heavy trucks and trailers have risen markedly since the end of 2013.This covers the items driving the surge as well the issue of demand sustainability. Looking beyond Q1’s weather driven capacity squeeze, the data suggest the freight supply-truck demand equilibrium, stuck in neutral for much of the current cycle, may finally have tipped into truckers’ favor. To answer the supply-demand question, Vieth touches on the economy, population metrics, and regulatory impacts. The program takes a close look at the productivity surge that has been at the heart of this cycle’s below-trend equipment demand. Freight, fleet demographics, and used equipment values are important, but trucker profitability is critical to demand timing. It is not for nothing that so many truckers have continued to drive old trucks longer than planned: fleet profitability, after an initial surge in mid 2010, has failed to move meaningfully higher in this cycle’s slow economic growth - strong productivity growth environment. The presentation will examine where ACT believes we are in this period of outsized productivity gains. Finally, Veith touches on factors that will influence demand in coming years to include new vehicle fuel economy, the estimated impact of last summer’s hours-of-service regulations, and long-term tightness in the driver supply.