Carrier profit margins widening: ACT

COLUMBUS, Ind. – Nowhere really to go but up, truckload carrier net profit share is expected to fuel improvement in demand for heavy-duty vehicles and trailers, according to ACT Research.

In the latest release of the ACT North American Commercial Vehicle Outlook, ACT projects that a strong rebound in net margins could propel full-year production up 26 percent compared to 2009 and accelerate into 2011.

Production of commercial trailers, says ACT, is expected to increase by 47 percent in 2010 and also post strong growth 2011.

However, because it is closely tied to the health of the housing sector, the medium-duty vehicle sector continues to recover slowly.

"Trucker profitability rebounded sharply in the second quarter, fueled by tightening capacity and rising freight rates," said John Burton, vice president-transportation sector with ACT Research. "Even with modest economic growth, commercial vehicle demand should continue to rise as carriers appear to be replacing an aging fleet but not adding capacity.

"Demand for new heavy-duty vehicles continues to be well below normal replacement levels, meaning overall fleet capacity is shrinking due to scrappage and export of used tractors. This will allow truckers to retain pricing leverage and profits," added Burton.

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