Market Forces Squeeze Truck Tire Manufacturers, Marketers
What are truck tire manufacturers and marketers up against as the second half of the year begins? That’s a big question. And there’s no single, all-encompassing answer.
Like commercial tire dealers, truck tire manufacturers and marketers are being squeezed by a wide range of factors - most of which are beyond their control.
In this MTD exclusive, executives discuss forces that are shaping the North American truck tire market and how these dynamics are impacting their business.
MTD: What are the biggest challenges facing truck tire manufacturers right now and why?
Gary Hendricks, general manager, commercial products, North America, Apollo Tyres: One of the major issues facing truck tire manufacturers is the global supply chain condition. Global supply chain disruptions continue to plague the North American truck tire market with container shortages, vessel constraints, exorbitant freight costs, shipping lane inconsistencies, lingering port congestion, inland transportation challenges, truck driver shortages, labor readiness issues - all remain considerable factors affecting domestic supply. Demand has returned to pre-COVID-19 levels. However, the COVID-19 pandemic clearly had a negative impact on global supply, which took a bit longer to ramp back up to capacity. Now we are trying to catch up.
Steve Sutherland, vice president, commercial dealer sales, Bridgestone Americas Inc.: Several challenges face the North American commercial truck tire segment, but the biggest issue facing manufacturers is demand for tires, which remains strong and continues to outpace the supply. In addition, domestic production capacity is constrained and imports from Asia are challenged with rising shipping costs and port delays. Finally, the tight supply of new tires is supercharging an already strong demand for sustainable and economical retreading services. This spiking demand for retreading is putting pressure on the supply in a way that hasn’t been seen in many years. At the end of the day, our fleet customers are focused on availability and it is currently more important than price.
Walt Weller, senior vice president, China Manufacturers Alliance LLC/Double Coin: Fundamentally, the issue is that the U.S. market is an import market. More than 50% of what we consume comes from somewhere else. Transportation costs are a major issue and will continue to be going forward - especially ocean freight. From the fourth quarter of 2019 to the present, ocean freight costs have increased four- to five-fold. Other logistics issues are creating havoc with longer lead times, inflexible delivery schedules and the lack of visibility to containers coming from overseas are just some of the issues creating added costs. Domestic (truck tire) manufacturers also are importing much more than they have in the past to supplement their domestic production.
Rob Williams, senior vice president, TBR sales, Hankook Tire North America: Rising costs continue to be the biggest challenge in the commercial truck tire sector - driven by a combination of supply chain slowdowns, increased fuel costs and labor shortages. These conditions are affecting not only tire manufacturers, but also commercial truck tire dealers and customers. The U.S. commercial truck market experienced unprecedented growth in 2021 versus prior years. This - coupled with major bottlenecks on shipping, lack of containers and vessel space, port congestion and driver shortages all converging at once - made it very difficult to meet dealer and fleet demand in the North American market.
Rick Phillips, CEO, Keter Tire USA Inc.: One of the biggest challenges for manufacturers right now is trying to forecast production and trying to make sure you have the right product available at the right time. Shipping and delivery continue to be major challenges and the entire industry is struggling with it right now. This will likely continue for the remainder of the year.
Ken Coltrane, vice president, marketing and product development, Prinx Chengshan Tire North America: Being able to supply tires to the market in a timely manner has been one of our biggest challenges. The cost of freight, of course, is another. As an importer, our biggest challenge is overcoming the high cost of freight. Freight cost for an imported TBR tire can range from $40 to $140 per tire or more, depending on tire size and destination.
Alan Eagleson, TBR segment manager, Sailun Tire Americas: The biggest challenges that Sailun Tire Americas faces are supply chain and logistics. It is a similar challenge across all industries that import products from overseas. Rates have quadrupled and service has been reduced by more than 50% in some cases. The high-volume container customers carry the hammer and smaller customers go to the back of the bus. A couple of other challenges are in raw material cost and OE demand. It is not so much the base raw materials - although some materials are higher - but it is the increased cost of shipping raw materials that has impacted costs.
Nick Guiterrez, sales director, Sentury Tire USA: It’s true that every single import supply chain, including the tire segment, has been impacted by inevitable rising costs. Tire manufacturers are faced with the challenge of continuing to meet the demands of their customers in a timely manner and also cover operating expenses, while remaining competitive.
Bill Dashiell, senior vice president, product marketing for commercial tire products, TBC Corp.: Supply chain issues continue to be the biggest challenge for tire manufacturers. Other significant challenges for all tire manufacturers include obtaining raw materials in a timely and cost-effective manner, as well as the increased cost of moving products to distributors and consumers due to COVID-19-driven labor shortages and supply chain disruptions.
Joaquin Gonzalez Jr., president, Tire Group International Inc.: We have seen freight skyrocket over the last 18 months because of lack of equipment on the ocean freight side and lack of drivers on the inland freight side. Prior to the pandemic, inland freight was already adjusting to new Department of Transportation regulations that targeted driver service hours and how those hours were logged. This led to many manufacturers shifting development of truck tires from a traditional regional or long-application to an all-inclusive, super-regional (application).
Dave Johnston, senior manager, commercial products and business development, Toyo Tire U.S.A. Corp.: One of the biggest challenges facing commercial truck tire manufacturers is meeting the demand of the market. While Toyo’s truck tire production did not slow down during the pandemic, expansions were quickly absorbed into the market. Global logistics challenges continue to hamper the industry as the economy recovers. Raw material costs, shipping and labor remain the top challenges facing tire manufacturers in 2022.
Demetric Mass, national sales manager, truck tires, Yokohama Off-Highway Tires America Inc.: Throughout the industry, shipping challenges and rising raw material costs are a challenge. We also are seeing rising demand for truck tires, especially for regional applications. And many tire manufacturers are under a great deal of pressure to keep up.
Dan Funkhouser, vice president of commercial sales, Yokohama Tire Corp.: There really isn’t one major issue, but rather a collection of challenges facing all of us. The global supply chain bottlenecks have been well-documented, as have the rising operational and raw material costs. Despite the rising costs, though, demand remains quite high. While cost increases aren’t exactly mitigated by local production, access to tires with a shorter availability window has been a big benefit for us.
Merry Wang, general manager, Zhongce Rubber Group Co. Ltd./ZC Rubber: The biggest challenge is the shipping situation. Since last year, shipping companies have increased freight (costs) several times. The other challenge comes from raw material price increases. It’s a big jump since last year. Manufacturers cannot adjust their pricing according to cost increases immediately.
Stay tuned to www.moderntiredealer.com for more comments from commercial truck tire suppliers.