Commercial Vehicle Demand Reminiscent of 2018 at Start of 2021, But Facing Challenges

ACT Research reports that fallout of this is reflected in Class 8 orders, especially for tractors, backlogs, and build rate pressures

According to ACT Research’s (ACT) latest State of the Industry: NA Classes 5-8 Report, although 2021 is starting much like January of 2018, there are steep front-end challenges to production.

“In 2018, the industry was beset with labor challenges reflected in sub-4% unemployment rates that posed production challenges through the first half,” said Kenny Vieth, ACT Research’s President and Senior Analyst. He added, “Similarly, factors are in place that mirror the beginning of 2018, and as then Class 8 production expectations are for significant growth in 2021. On top of pandemic-related challenges of keeping and growing staff are material shortage issues.” Vieth noted, “Most immediately, the industry is on the front-end of a silicon chip shortage. While chips have taken center stage, the diversion of oxygen production in Mexico from industrial to medical purposes and reports that steel has become increasingly challenging to secure are in the wings as potential constraints.”

By commercial vehicle segment, Vieth commented, “Even with these constraints, the economy is growing in all the right places for freight, with freight rates strong and carrier profitability rising. The fallout of this is reflected in Class 8 orders, especially for tractors, backlogs, and build rate pressures.” Regarding the medium-duty segment, he noted, “Like their bigger peers, the medium-duty market continues to put down strong numbers, reflecting strength in goods demand and construction.”

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