If spot rates are any guide, steel supplies also remain tight, he added. Vieth said he doesn't expect theВ semiconductor shortage to be rectified this year, adding 'there are reports of supply improvements, but those have not yet translated into higher build rates.' 'Some large players in the MD space are doing the same thing, using chips that would have been destined for cars and pickups to maintain Classes 5-7 output.вЂќ 'Additionally, we have heard/read that the heavy-duty OEMs are taking semiconductors away from their medium-duty products to maximize the value of the chips,' he added. Like Class 8, the medium duty decline was also the lowest since May 2020вЂ™s COVID-shutdown-related output. 'During the month, Class 8 production fell to a 15-month low, as build per available day dropped materially below trend.вЂќД«uilds of class 5-7 trucks also slid in July, but Vieth said that was more in line with expectations. вЂњThe Class 8 market saw build rates take a big step backward in July, as OEMs took down days and weeks to compensate for component shortages, especially semiconductors,' Vieth said. However, Class 8 build rates tumbled in July. Except for the COVID Delta variant asterisk, economic strength is broad-based and concentrated in goods-related economic activity. 'There are growing pains at the start of every cycle, as the supply chain lurches unevenly into higher build rates, but this pandemic recovery cycle has been beset with extraordinary global issues that have amplified traditional ramp-up challenges from steel supplies to domestic staffing to semiconductors.вЂќДЄCT highlighted thatВ there's not been a noteworthy change in trajectory of macro datapoints that influence commercial vehicle demand. вЂњHistorically, strong orders starting in Q4, the accumulation of large backlogs and growing lead times are a recipe for production rising sharply at this point in an industry up-cycle,вЂќ said ACT Research President and Senior AnalystВ Kenny Vieth. The truck business isn't fairing any better and faces similar headwinds despite fervent demand. Truck builds in the same boat as trailers Before accounting for cancellations, new orders of 9,500 units were down more than 27% versus June, and 53% lower than the previous July. trailer orders of 8,128 units fell nearly 26% from the previous month, according to ACT, and were almost 58% lower compared to July 2020. Of course, pricing, which is still under development, will also have a major impact on that order pace.вЂќ A similar pattern could well be in the offing. 'For reference, remember the order surge that occurred in late 2018, which immediately pushed commitments through Q3 of the next year. 'We already have orderboards that extend into Q2вЂ™22 on average,' he said. TheВ unknown, Maly said, is how quickly OEMs will be able to ramp production, which will correspondingly impact their pace of order acceptance. Once orders are again accepted, expect a flood that could consume a significant portion of the remaining 2022 production slots.вЂќ While order volumes have remained low, there is no question that negotiations have continued. 'In turn, meaningful pent-up demand is occurring due to the reluctance to accept dry van and reefer orders at this time, with the average industry backlog-to-build ratio extending to the end of Q1вЂ™22, at June 2021 build rates,' he said.В вЂњHow coordinated the timing of that opening by the OEMs is a second major question. Maly said concerns over future availability and pricing are major factors in the trailer OEMs' unwillingness to accept future orders, which is causing uncertainty about the timing of the 'official' opening of the 2022 orders. 'That said, pricing and availability of components and materials are resulting in higher trailer prices and a build-up of red-tag units, with the volume of these units expected to continue growing during the upcoming months.вЂќ Some indications are that staffing challenges may be easing slightly, he added, and that the upcoming end of supplemental unemployment benefits could further improve workforce availability. trailer OEMs,вЂќ said Frank Maly, director of CV Transportation analysis and research at ACT Research. вЂњMaterial and component supplies, as well as staffing issues, continue to generate headwinds for U.S. Commercial vehicle demand, medium-duty, heavy-duty and trailer backlogs are essentially filled into 2022, according to ACT, with backlog-to-build ratios well above traditional ranges and inventories below traditional thresholds. began crawling towards a post-pandemic economic recovery. Truck and trailer builds are hampered by raw material and labor shortages that have dragged on since the U.S. Truck and trailer manufacturers are desperately trying to increase production rates but are struggling to overcome a myriad of obstacles, according to ACT Research.

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