COVID-19 Impacting CV Markets, but What’s Next?

ACT Research believes activity will reach bottom sometime in the second half of 2020 and be followed by recovery

According to ACT Research’s recently released Transportation Digest, the pervasive negative impact of the COVID-19 pandemic has forced a major downward shift on ACT’s views of the heavy duty market for 2020. However, the report also discusses what might happen next for the economy and by extension, the transportation industry.

“While we believe activity will reach bottom sometime in the second half of 2020 and be followed by recovery, that view is tentative and tenuous, as any scenario is dependent on the trajectory of the disease,” said Kenny Vieth, ACT’s President and Senior Analyst. He added, “The timing and slope of a recovery process is highly uncertain and while services took the hardest initial hits in early March, the shutdowns have spread into freight-intensive goods-producing sectors, like energy, manufacturing, and construction.”

Vieth continued, “Low-margin necessities crowded out higher margin items during the pantry-stocking phenomenon we saw in March, supporting transportation volumes and freight rates during that logistics scramble to fill channels, but that was last month.” He further explained, “ACT believes rising unemployment, falling profits and incomes, and COVID-triggered risk-aversion will determine consumer and business behavior. If so, we are on the threshold of a steep fall that will mark the second quarter as the worst for the North American economy since the Great Depression of the 1930s.”

Vieth is, however, cautiously optimistic, noting, “While a sharp decline can be followed by a sharp rise thanks to pent-up demand, it is also important to note that reviving shuttered production and recalling the labor force will require unprecedented steps to ensure safety.”

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