The registration of heavy trucks in the U.S. plummeted in 2020 with a 26% year-on-year decline owing to pandemic & the subsequent imposition of lockdowns.
The Global Trucking industry had been impacted significantly by the outbreak of COVID-19 in 2020 (with the clear exception of China), with declining volumes as well as profitability across OEMs with recovery seen in the later part of the year, led, primarily by the unprecedented surge in e-commerce volumes.
Trucking has been pivotal to the United States Economy accounting for around 72% of the nation's freight by weight and the trend is likely to be sustained over long term. However, trucking in North America has been more of a tug of war between the continent's aboriginal truck-makers and the European settlers with the latter, led by Daimler, dominating the show especially in the Class 8 market.
Truck registrations in the U.S. have been recovering steadily since the second half of 2020 with the same sustained in 2021 so far led by ongoing economic recovery driving up freight volumes & rates. The same has stimulated replacement demand across operators and is likely to drive fleet expansion in 2021. The near term view of the Class 6-8 market looks optimistic with an upward demand growth trajectory likely through 2022 following likely pursuit of fiscal intervention measures by nations & governments across most regions going forward coupled with strong global economic recovery projections by the IMF for 2021 & 2022, led by the U.S.
The industry also continues to make steady progress towards development of sustainable technologies geared towards de-carbonization of transportation. The efforts have primarily been led by battery-electric & fuel cell technologies with the tipping point for electric trucks likely to come in form of the serial assembly of electric trucks across trucking behemoths, Daimler & Volvo, apart from most other OEMs over near term.
The rapid move towards de-carbonization of transportation & transition towards sustainability; along with Connectivity & Autonomous technologies; is collectively likely to drive significant replacement demand over medium term across most traditional markets while it has already led to a spike in M&A activity, JVs & partnerships amongst leading industry players with the same likely to see a further uptick going forward. Further, the sustained rise in global crude oil prices is likely to give a further stimulus to transition towards alternate drivetrains across operators going forward.
Further, the massive, $2 trillion infrastructure plan just outlined by the Biden administration in early April 2021; geared towards comprehensive repair & rebuilding of roads, railroads, bridges & ports in the U.S.; could turn out to be the much needed shot in the arm for the on & off-highway segments over medium term with an outlay of $115 billion planned towards repair of highways & bridges alone, if it gets approved by the Congress.
However, managing supply side delays & disruptions, especially for semi-conductor chips, owing to the pandemic and its uncertain trajectory going forward, will be crucial to sustaining recovery over near term which is likely to continue well into 2022.