The U.S. economy continues to operate in negative territory, but the slope of the decline is moderating. That was one of the key takeaways from the ACT Research Co. (ACT) semi-annual commercial vehicle conference.
The bad news is that although the economy could move into positive territory, albeit below-trend growth, by the fourth quarter, above-trend economic growth does not appear to be likely before late 2010.
In the 40th conference hosted by the Columbus, Indiana, firm, speakers included leaders from the American Trucking Association, the Federal Reserve Bank of Chicago, TransCore, Eaton Corporation, Milan Express, Arrow Truck Sales, Schneider National, JD Power & Associates and ACT Research.
Other key observations and take away points from the conference included:
- Freight generators, like new housing starts and automotive build, are needed to reverse and rejuvenate the freight situation. There was no consensus that these industries have reached bottom, but like the economy, the rate of decline has moderated.
- Without a more vigorous economic rebound, freight growth will continue to be compromised. This translates into continuing excess hauling capacity (too many trucks and trailers for too little freight), which is acting like a brake on new and used equipment demand.
- Excess hauling capacity is allowing shippers to be more aggressive in freight rate negotiations and using spot freight as a lever to further reduce the cost of transportation.
- Tight credit availability continues to be a drag on used truck sales while banks with outstanding equipment loans are opting for workouts with new terms rather than repossessing equipment.
- New equipment demand is being hampered by an increasing gap between stable to rising new equipment prices and dramatically declining used tractor and trailer prices. As a result, the North American truck and trailer fleets are aging to levels not previously seen or thought to be sustainable.
- The conference draws executives from commercial vehicle manufacturers and suppliers, the transportation industry and capital market investment analysts.
“Given the state of the economy, attendance at the conference was excellent,” said Ken Vieth, Sr. Partner and General Manager of ACT. “The interaction between our guest speakers and participants always facilitates a healthy exchange of thoughts and information.”
ACT’s next seminar will be held October 28 in Indianapolis, Indiana.