Even though for-hire capacity contracted again, the Freight Rates Index slid to 48.7 in...

Even though for-hire capacity contracted again, the Freight Rates Index slid to 48.7 in December, ACT Research said in new report.

Graph: ACT Research

The latest reports from ACT Research show improvement in for-hire freight volumes, but also a slide in the Freight Rate Index in December and a slight improvement in the economic outlook for 2020.

The latest release of ACT’s For-Hire Trucking Index, with December data, showed improvement in for-hire freight volumes and utilization, with 55.5 and 52.3 respective diffusion index readings, both up four points from November on a seasonally adjusted basis. But even as for-hire capacity contracted again, the Freight Rates Index slid to 48.7 in December.

“We see encouraging signs that the freight downturn is in its late stages and the market will rebalance in 2020," said Tim Denoyer, ACT VP and senior analyst. "However, the ongoing rate pressure, even as volumes ramped into the holidays, is symptomatic of ongoing excess industry capacity. Our survey respondents clearly get it, and reduced capacity for a sixth straight month, so we can pretty easily deduce that private fleet capacity additions through year-end 2019 are the main factor continuing to pressure for-hire rates.”

The ACT For-Hire Trucking Index is a monthly survey of for-hire trucking service providers. ACT Research  converts responses into diffusion indexes, where the neutral or flat level is 50.

In other news, ACT Research projects that U.S. economy is poised to expand by 1.8% in 2020.

That figure is based on ACT’s State of the Industry: NA Classes 5-8 report, which provides a monthly look at the current production, sales, and general state of the on-road heavy and medium duty commercial vehicle markets in North America.

“The risk of an economy-wide recession that was a growing concern through the third quarter of 2019 has largely faded, with healthy consumer fundamentals expected to provide sufficient momentum to get through the slow patch in industrial activity,” said Kenny Vieth, president and senior analyst. He continued, “That said, the manufacturing recession continues, and the supply-demand imbalance between trucks and freight currently weighing on carrier profitability is likely to extend deep into 2020.”

Speaking about the Class 8 market, Vieth said, “For those keeping score, 2019 was the second-best year in history for Class 8 production, trailing only the EPA’07 prebuy-driven volumes of 2006. While a downturn is expected this year, the silver living is that the expected production decline in 2020 will pale compared to the 42% drop recorded in 2007.”

Regarding the medium-duty markets, he commented, “Choosing not to do a 50-year lookback, we are calling 2019 the new record year for medium-duty vehicle production, eclipsing the previous record set in 1999. And although the cycle is shallower, it isn’t so different from the heavy-duty experience over the course of last year, including lower orders, inventory building and a sharp decline in backlogs that will constrain the industry in 2020.”

About the author
Staff Writer

Staff Writer


Our team of enterprising editors brings years of experience covering the fleet industry. We offer a deep understanding of trends and the ever-evolving landscapes we cover in fleet, trucking, and transportation.  

View Bio