ACT Research analysts are less confident that supply chain issues will subside enough for commercial vehicle manufacturers to fully meet demand this year and next.
“Recent commentary from leaders in the semiconductor industry point to a more cautious outlook for longer,” said ACT Research President and Senior Analyst, Kenny Vieth.
“ASML, a key supplier of semiconductor production equipment, recently called out a ‘significant shortage of semiconductor manufacturing capacity this year and next’.
“In light of this and other industry commentary, we believe lower-for-longer chip availability is likely to restrain the industry’s ability to meet otherwise-strong customer demand.”
Vieth mentioned additional downside risks.
“Moreover, about half of the global supply of neon, critical for chipmaking, is concentrated in Odessa, Ukraine, where production has been down since February,” he said. “The gases that were purified in Ukraine were generated by Russian steel manufacturers. A scramble to re-source is on and inventories are limited.”
ACT Research expects an increase in commercial vehicle builds despite these production challenges.
“Carrier profitability is robust,” he said. “We expect any recession to be shallow and short-lived at this point, and our Class 8 models are indicating pent-up demand, as well as pre-buying potential in advance of CARB’s costly Clean Truck mandate.”
In other news, dry van orders are responsble for the decline in US trailer net orders in April.
Trailer orders of 19,614 units decreased more than 48 per cent from the previous month, but were 23 per cent higher compared to April of 2021.
“Order placement remained choppy in April, and dry vans, with a 64 per cent month-over-month slide in net, were responsible for the total industry decline,” said Frank Maly, Director–CV Transportation Analysis and Research at ACT Research.
“Despite April’s drop, OEMs continue to negotiate with fleets and that effort is building a large group of staged/planned orders that are not yet officially posted to the backlog.
“Once OEMs gain sufficient confidence in their supply chain and labor availability to open 2023 production slots, expect a surge of orders to be ‘officially’ accepted.”
he industry, according to Maly, has normally not been willing to push their commitments past 12 months, and crossing into a new calendar year this quickly would not normally be under consideration.
“However, recent years, including the pandemic-battered 2020/21, have been anything but normal, leading us to expect some OEMs to begin viewing deeper orderboards, with appropriate cost/price protections, which would result in both a competitive advantage and improved fleet relations,” he said.
“The orderboard slid sequentially in April, and we expect the backlog to contract as we move through late spring and early summer, but the yet-to-be-determined date for opening the 2023 orderboards will reverse the backlog contraction and likely quickly extend the backlog well into next year.”