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“Inventory Overhang” Helping Sustain Rise in Class 8 Truck Supply

April 14, 2016

By David Cullen

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Image: TRALA
Image: TRALA

The supply of Class 8 trucks continues to rise faster than the demand for those trucks, according to ACT Research Co.’s most recent ACT For-Hire Trucking Index.

“The capacity index [supply] rose faster than the freight index [demand] for the seventh consecutive month and the twelfth time in the past fourteen months in March,” said Kenny Vieth, ACT’s president and senior analyst.

Vieth said that along with ongoing weakness in domestic manufacturing, an “inventory overhang” continues to hold back the creation of new truck freight.

“A return to ‘normal’ inventory levels in the broader economy is the first step to improved freight market performance,” he said. “However, to date the correction has been slower than expected in coming.”

Another industry forecaster, speaking at last month’s Fleet Forum seminar in Louisville, Ky., said that excessive inventories are holding back spending by U.S. businesses. “Inventory levels are now problematic,” said Eric Starks, president of FTR Transportation Intelligence.  “Too much inventory reduces demand for freight transportation. We need to see inventories go down before [business] orders can pick up.”

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