Too Much Capacity Challenging Heavy Truck Market

It is going to be a capacity rationalization year

According to ACT Research’s recently released Transportation Digest, key truck transportation metrics continued to give mixed signals in early 2020. Additionally, the report explained that the total medium duty market closed 2019 on a positive note, with all indicators improving sequentially in December, while the US trailer segment closed 2019 on weak net orders, well below seasonal expectations.

 “The core challenge in the heavy truck market in 2020 is that significant capacity was added in 2019 relative to freight growth. That imbalance is reflected in today’s weak rate environment,” said Kenny Vieth, ACT’s President and Senior Analyst. He added, “As the economy and freight slowed in 2019, the capacity excess put asset holders on the defensive and gave shippers a big edge in 2020’s rate negotiations.”

Regarding the heavy truck market in 2020, Vieth commented, “It is going to be a capacity rationalization year, that hopefully will go a long way in restoring the supply-demand balance between trucks and freight.” Regarding the medium duty and trailer segments, he explained, “In 2019, the medium duty sector saw moderate gains in production and sales, but weakening demand in late 2019 set a course for an overall decline in 2020. Anecdotal information from the trailer market points to price concessions occurring to incentivize order placements, in hope that those incentives will help to soften anticipated large declines.”

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