No Tariffs, No Certainty for Truck Tires
When it comes to medium truck tires, fuel efficiency and cost-per-mile considerations remain priorities, but there are other trends driving the segment as well.
Heavier front axles on trucks are requiring higher load ratings on steer tires. Fleets are adapting to wide-base tires.
Smart tires, outfitted with sensors, are monitoring everything from changes in a tire’s pressure to the truck’s load and speed. The data can help fleet managers calculate and understand the factors contributing to tire wear.
And those are just a few of the highlights. Fourteen tire manufacturers outlined the top trends in truck tires.
But there’s another force at play in the current truck tire market, one some might have thought was settled. Tariffs — and even a lack of tariffs — are creating uncertainty.
The decision in February 2017 by the International Trade Commission (ITC) not to impose tariffs on truck and bus tires from China was a stunner. There had been no indication leading up to the ITC’s vote that the case would go that way, and the early stage of the investigation indicated nearly all truck and bus tires from China would be subject to tariffs of around 50%. Dealers and tire distributors tried to beat what seemed like an inevitable price hike. Now they’re sitting on excess inventory as these imports are returning to the U.S. market.
Rick Phillips, vice president of sales for Triangle Tire USA, says that’s the biggest impact of the tariff decision. “But going forward the impact of the decision will ultimately be determined by the end users buying the tires, and by the dealers delivering the tires.
“The market certainly has an appetite for products in this space and that is not diminishing, especially as many of the Chinese manufacturers improve the quality of their products.”
Bill Jepsen, commercial tire sales manager for Kumho Tire USA Inc., agrees. He calls the no-tariff vote a curve ball. Dealers who brought in inventory before the ruling are sitting on it, and in some cases it’s losing value as Chinese tires are hitting the market again. “What this has done is significantly reduced the price points on truck tires. The price increases of March and April are being given back with discounts by most tire brands.”
Dealers aren’t sure how to react, says Tom Clauer, manager of commercial and off-the-road product planning for Yokohama Tire Corp., “Over the course of the last 18 months, we have seen wide swings in the volume from China coming into the U.S. every month. It’s tough for dealers to understand if they should buy ahead, if there will be future availability, or if they should avoid being stuck with product at a higher-than-expected cost.
“We expect more Chinese product to come into the market, but it becomes complicated that it is happening at a time when the cost of raw materials is increasing. The biggest challenge for our dealers seems to be the uncertainty.”
Walt Weller, senior vice president of China Manufacturers Alliance LLC (CMA), thinks Chinese-made tires will continue to grow in the U.S. market, “although not as much as in the past due to shifts in production by Chinese manufacturers to other countries.” He foresees more Chinese manufacturers building plants in the U.S. CMA is a subsidiary of Double Coin Holdings Ltd., which is building its first manufacturing facility outside of China — in Thailand.
That’s a move many manufacturers have made in recent years. Bill Dashiell, senior vice president of TBC Corp.’s commercial tire division, says, “With the decision not to have duties, the industry in effect has only added TBR production capabilities to a situation that already had excess TBR capacity.”
Weller says there’s only one solution. “Although the lead time on a new manufacturing facility in the U.S. is a minimum of three years, it is the only way to avoid tariffs going forward. Domestic manufacturers will continue to lose share due to the lack of significant increases in domestic supply (new plants).” There’s not a consensus on what kinds of tires will come out of China, specifically, what level of quality those tires will offer. “We are already seeing an influx of products and offers back into the market,” says TBC’s Dashiell. “We are seeing rapidly accelerated competitive offers especially with Tier 4 products. Pricing is going to be very challenging in the short term for all segments with a slow market and the increase in Tier 3 and 4 tires into the market until we as an industry adjust to the new environment of increased TBR tire supply.”
“What I think we will see is fewer Chinese companies working the very bottom of the market,” says John Hull, national truck tire sales manager for Alliance Tire Americas Inc.
“Looking longer-term, I think the Chinese manufacturers are going to establish their presence in the U.S. market in a much more traditional way — by building a corporate presence and customer support network here,” Hull says. “The tariff created a window, or a stimulus, for the Chinese manufacturers to re-think how they do business in America. They will build manufacturing here, they’ll have American sales forces, and they will become part of the American industry.”
Richard Li, marketing director for the China-based Zhongce Rubber Group Co. Ltd. (ZC Rubber), says Chinese tire makers need to make improvements to grab more market share. “The market does need low cost tires, but the share is still limited. If Chinese tire manufacturers want more shares, they shall keep investing in technology, marketing and a distributor network.”
It’s agreed what segment of the industry will be hardest hit by the no-tariff rule: retreading. Marcus Hancock, vice president of technology for Omni United (S) Pte. Ltd., says even though retreaded tires offer advantages over imported tires, “the fact is that new, imported tires have improved quality and consistency over the past few years, and still offer economic advantages over retreaded tires. If the U.S. cost base was lower it would be a different story.”
Adam Murphy, vice president of marketing for Michelin Americas Truck Tires, a division of Michelin North America Inc., expects Chinese tires to “continue to put pressure on the retread market, especially cap and casing.” Still, he says premium retread products “provide superior performance and value to low cost Chinese tires.”
Bryant Davis, vice president of sales for truck, bus and retreads at Bridgestone Americas Tire Operations LLC, agrees “Given current market dynamics, we believe it is important for us to work together as an industry to educate fleet customers on the benefits of retreads.”
That education is valuable, but Hancock from Omni United says there also needs to be room in the truck tire market for products that solve the needs of consumers, businesses and manufacturers. “There should be a place for Tier 1, 2 and 3 manufacturers in this segment of the tire market. Imposing a blanket tariff on one country will just push manufacturing to other, relatively low-cost countries, which defeats the purpose of the tariffs! If there is a strong push for ‘made in USA’, the cost of goods will increase as end consumers will have to bear the increase costs eventually. This issue will not go away.”Truck tire trends
Modern Tire Dealer asked tire manufacturers to identify two top trends in the medium truck tire market.
Hull, Alliance: We’re seeing more manufacturers looking to offer more sophisticated, application-specific products, such as truck tires with high-performance features like greater fuel economy and longer tread wear. That’s being led primarily by the Tier 1 manufacturers, who are working to hold onto their market share and defend their premiums by bringing new features and new levels of performance to the market. Those companies are introducing a new generation of manufacturing technologies that they can use to build more advanced tires. I believe we’ll be seeing some exciting technologies at the top end of the market in the next few years, and ultimately, that will work its way through the system to the Tier 2, 3 and 4 manufacturers, too.
On a more specific level, I think we’re seeing a move away from high-tread-depth tires toward lower tread depths with better engineering and compounds that will produce lower rolling resistance with additional mileage.
Davis, Bridgestone: One trend in the commercial trucking industry is new trucks with a higher front axle rating, i.e. 14,200 pounds. This is occurring to accommodate more fuel efficient truck designs. Up until now, steer tire sales have been predominantly 14 ply, but with new axle ratings, 16 ply tires will be required on these trucks. As this shift takes place, it is important for fleets to buy the proper ply rating for a heavier axle load.
We’re also seeing fleets use trucks in a wider operating environment. This is largely due to the ongoing driver shortage and an increase in utilization. For example, trucks that would typically travel from a plant to distribution center and back are making stops in a more regional environment. This type of usage is being described as a super-regional fleet. As such, truck tires must work across various environments and have multiple performance characteristics, including long wear, fuel efficiency and durability.
Weller, CMA: Trends include tires for heavier steer axles, and the shift of production from China to other markets. I believe we will also see more manufacturers start production facilities in North America.
Gary Schroeder, director of truck and bus tire business, Cooper Tire & Rubber Co.: Many initiatives focus on making tires more sustainable, with designs that improve fuel economy by reducing tire weight and rolling resistance. Traditionally, when trying to make advancements in one aspect of a tire, such as rolling resistance, the raw materials available and/or equipment available would make it difficult to not sacrifice another area of the tire’s performance. However, with the advancements of raw material inputs and manufacturing processes, tire manufacturers have the ability to improve multiple attributes of a tire without sacrificing other attributes.
Brian Buckham, general manager of product marketing, Goodyear Tire & Rubber Co.: Fleets are asking for tires that offer long tread wear and enhanced traction. However, they also recognize they will continue to need low rolling resistance tires that are SmartWay verified.
Tread wear, traction and low rolling resistance make up what we call the performance triangle. It is important to achieve the right balance between these performance benefits. In the past, when one benefit was optimized, other benefits of the performance triangle were reduced. This dynamic is much less prevalent these days.
Longer term, tire manufacturers are preparing for GHG (Greenhouse Gas) Phase 2 rolling resistance requirements, which are scheduled to begin in 2021. This will drive greater demand for tires that go beyond basic SmartWay verification, or what we call “super fuel” tires. Fleets also will demand super-fuel efficient retreads to meet increasingly stringent fuel efficiency requirements.
Pat Tripp, director of purchasing truck, bus and trailer tires, American Tire Distributors Inc., maker of Hercules tires: Just a few years ago many manufacturers were seemingly in a race to get patterns EPA SmartWay verified. We now see more attention being placed on designing tires for longer tread life, even if it means sacrificing SmartWay verification. Regional service applications need different tread patterns and compounds — tires that can withstand high scrub situations. So we have a number of tires that will be in the market soon that put a premium on longevity over low rolling resistance. Ultimately, the right tire for the application will enable the vehicle to work more efficiently and for longer periods between tire service.
Jepsen, Kumho: Trends include longer lasting, durable and even-wearing SmartWay-verified tires, as well as 16-ply steer tires due to more pollution mitigation equipment on semi-trucks.
Steve White, original equipment business strategy and planning manager, Michelin: With the multitude of uses for medium-duty trucks it is hard to generalize specific tire performance trends. It seems most customers are looking for a combination from three main performance attributes; robustness, long tread life or traction. Examples would be: resistance of the tire to damage and the need for traction for construction; robust side walls for curbing and long tread life for urban delivery; or winter traction and long tread life for northern tow truck applications.
Murphy, Michelin: Connected tires provide key data that can be analyzed and leveraged to help fleets improve their operations. Nearly 100% of Michelin, BFGoodrich, and Uniroyal truck tires are produced with a RFID sensor embedded in them. A second key trend continues to be wide-base single tires, which continue to grow thanks to the value they bring to fleets that can benefit from the additional payload capacity and fuel efficiency benefits they bring.
Hancock, Omni United: Two of the top trends are driven from OE requirements and increasing regulations: lower rolling resistance tires and intelligent tires.
Modeling and special polymers and fillers are increasingly important in achieving low rolling resistance. A lot of effort goes into compounding with nano-polymers and sophisticated filler and cure systems used to maximize fuel savings as well as maintaining tread wear, grip, low heat build-up and other key characteristics. This work will continue as regulations become more stringent and technology improves beyond SmartWay requirements and GHG Phase 2.
Intelligent tires are being designed and engineered to give feedback to the fleet manager as well as the tire manufacturer. With overall loads and the number of miles increasing each year, it’s important for fleet managers to understand the true cost per mile of the tires they use. Sensors can communicate tire pressure (and pressure drop), load carried, temperature of the cavity and more accurately measure tire wear.
This data can be used to optimize tire rotation, ensure correct pressures are maintained and also understand the relationship between vehicle speed, heat build-up and tire wear/fuel consumption. This technology will get more sophisticated and will be utilized by more fleets so they can minimize costs and maximize tire life. Dashiell, TBC: Greater tread life is still a primary focus. Long haul steer tires are one area of focus for increased mileage. Long haul steer tires remain one of the hardest products to make perform to end user expectations; at times every manufacturer has struggled to develop a tire that works well, while many manufacturers still are unable to achieve target mileage for this category. Most long haul steer tires are taken out of service prematurely due to irregular wear, and manufacturers are concentrating on ways to extend mileage by reducing irregular wear.
Steer tire life is especially important with some of the newer heavier front axle power units coming into the market. These units require higher ply rated tires, making it even more critical to solve the irregular wear challenge for steer tires.
Mike Graber, senior manager of product planning and technical services, Toyo Tire U.S.A. Corp.: We definitely see a trend towards heavier front axles. The result is more demand for higher load ratings on steer tires. Customers also are demanding long tread life to go along with improved fuel efficiency; they are increasingly focused on the tire cost per mile.
Phillips, Triangle: Manufacturers continually try to bring a better tire to market, and the goal is always to deliver the lowest cost per mile as safely as possible. So tires that consume less fuel and can extend the casing life through retreading will certainly help a fleet lower their cost. There have been some major improvements over the years and the gains we are seeing now are nominal; but as technology improves we keep finding ways to improve tire performance and lower the total cost of ownership.
Clauer, Yokohama: Because fuel efficiency and tread life have been consistent targets in the industry, the introduction of those products remains a focus for Yokohama. We believe OEMs also will continue to push fuel efficiency requirements, and that benefit filters down to our customers. Ultimately, it comes down to the cost per mile and total cost of ownership for fleets. We can’t ignore rolling resistance or tread life.
Ultra-wide-base are trending, as we have seen growing acceptance by fleets across the country. We anticipate this segment will continue to grow, and we have more products slated to launch in the future. We’ve also seen a rise in increased load capacities for heavier steer axles resulting from the addition of emission devices in tractors, and 16-ply steer and all-position tires with additional load carrying capacities are becoming more common.
Li, ZC Rubber: We believe that long mileage will still be the key for fleets. Improved fuel efficiency will be another focus for long haul trucks. ■