Transportation December 24, 2019
Business conditions generate disappointing stats according to ACT, ATA reports.
Freight carriers are in for a rough ride in the new year as carrier profitability heads toward tougher business conditions in 2020, according to an industry report released today.
“Succumbing to the slowing economy, forward-looking metrics in the medium duty Classes 5-7 markets were awash in a sea of red ink in October, although moderate growth persists in build expectations,” ACT Research, a Columbus, Ind.-based analyst and forecasting firm, said in the report.
The report reflects disappointing statistics for October, which is traditionally the strongest month of the year for orders of medium duty equipment, according to ACT President and Senior Analyst Kenny Vieth.
“After peak sales and build in 2019, significant declines are ahead in 2020, as heavy duty sales and build follow the net orders trend down,” Veith said. “But if our forecast of ongoing (but slower) economic expansion holds in 2020, the drop will be a correction (along the lines of 2015 and 2016), not a devasting recession (as in 2008 and 2009).”
The numbers reinforce another gloomy industry measure released yesterday, which showed that truck tonnage slumped in November after recording a disappointing October, according to a study by the American Trucking Associations (ATA).
The ATA’s advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 3.5% in November after falling 0.7% in October.
“It’s tough to sugar coat November’s reading,” ATA Chief Economist Bob Costello said in a release. “It was the third decrease in the last four months and the index is down 7.2% since July. Additionally, November was the first month to see a year-over-year drop in the index since April 2017. While disappointing, it fits with the expected soft gross domestic product reading expected in the fourth quarter and reports of a soft fall freight season.”
ATA’s index for November measured 113.5, down from its level of 117.6 in October and its reference base of 100 for 2015. Compared with the same month a year earlier (November 2018), the index fell 2.1%, its first year-over-year decline since April 2017 and the largest drop since February of that year.
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