ARE THINGS SLOWING DOWN?

February 14, 2019 Volume 1, Number 2

At the end of 2018 truck-makers were buoyant, riding the crest of a standout year for sales in classes 6 to 8, trailers too. Both Freightliner and Volvo didn’t see a lot changing in 2019, at least not until the second half. January tells a slightly different tale.

In the middle of last month ACT Research reported that things were looking a little weak in the U.S. economy and, by extension, for the North American commercial vehicle industry.

“Over the course of Q4 2018, the list of indicators flashing yellow became longer and brighter for the U.S. economy,” said Kenny Vieth, ACT’s president and senior analyst. “While there is insufficient evidence to make a recession call, there is enough presently to suggest growing potential for sectoral recessions, à la 2015.”

Regarding trucking rates, Vieth said: “After several months of deterioration, the spread between contract and spot rates has been sufficiently wide for a sufficiently long period that ACT’s rate-pressure analysis is now calling for negative contract rates, if just, by Q2 2019.”

YELLOW LIGHTS ARE STILL BURNING

Earlier this month ACT said it still has concerns about the U.S. economy and the commercial vehicle industry.

“While the outlook has less of an orange tinge, sufficient caution flags remain to keep the yellow light burning regarding the near to mid-term economic outlook,” said Kenny Vieth. “While we’ve seen improvement in petroleum prices, equity valuations, and a monetary policy pause, we remain cautious regarding indicators like a flat yield curve, quantitative tightening, potential fallout from tariffs and trade wars, as well as the global economic slowdown.”

As far as the heavy vehicle industry is concerned, Vieth said: “ACT’s Tractor Dashboard posted a third consecutive negative five reading in December, suggesting demand will increasingly come under pressure in the first half of 2019.”