Truck demand is likely to decrease in light of falling spot market rates and rising fuel costs, ACT Research reports.

And the chance of a mild recession is increasing.

“Russian commodities remain locked out of Western markets, Ukraine remains besieged, and China continues to struggle with Covid and lockdowns,” Eric Crawford, vice-president and senior analyst with ACT Research, said in a press release.

“The battle against inflation is global. U.S. inflation continues to accelerate, prompting the [U.S. Federal Reserve] to lift the Fed Funds rate 75 basis points this week, the largest increase since 1994, and markets and economists are increasingly predicting a U.S. recession in 2023.”

When asked what this all means for commercial vehicle markets, Crawford said, “While Classes 5-8 production exceeded lowered expectations in May and build plans were largely unchanged, supply chain risks remain elevated. Moreover, we believe the likelihood of a U.S. economic recession is growing and probability of a mild recession is now about as likely as that of our base-case scenario.”

Regarding commercial vehicle segment production and orders, Crawford added, “Backlogs remain long and order volumes remain constrained. Until build rates find additional traction, orders will largely mirror production levels, but the steep decline in truckload spot rates [excluding fuel surcharges] in recent months will soon impact vehicle demand.”