SCDigest reported last week how shortages of parts and components from suppliers in the face of robust global demand is causing supply chain issues for a growing number of US manufacturers. (See Parts and Component Shortages Crimping Manufacturing Supply Chains.)
As fate would have it, one of the affective sectors is heavy duty truck manufacturing, where delivery times for new truck orders are now stretching to delays not seen until 2006, when the backlog was related to coming EPA requirements.
Supply Chain Digest Says... |
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| The good news is several sources say parts suppliers have ramped up hiring or used other methods to increase throughput. |
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As reported by the Wall Street Journal Saturday, the lead time is now running at about nine months, almost double the five months typically experienced in normal times.
North American carriers and private fleets ordered more than 300,000 Class 8 trucks in the first seven months of this year and are on track to order a record 450,000 of the heavy-duty vehicles for the full year, according to ACT Research. That would shatter the existing high of 390,000 trucks ordered in 2004. What's more, the 52,000 trucks ordered in July set a single month record.
The chart below from the transportaiton sector analysysts at FTR shows how new Class 8 truck orders in many months through July of this year have been more than twice the level of 2017 volumes.
In an interesting situation, most carriers of course are having trouble finding enough drivers to fill new trucks to meet shipper demand, keeping a lid on capacity that makes it difficult to find someone to move each load. But one way of attracting or retaining drivers in the industry is to offer them spiffy new tractors to drive. The new trucks will also deliver improved gas mileage, a big cost cutter in a period of once again rising oil and diesel prices.
So the orders are coming with or without plans to find additional new drivers. But component supplier can't keep up with the surge.
"There's basically a shortage of trucks right now because of supply-chain issues," Don Ake, an analyst with FTR. Manufacturers, told the Journal. OEMs "can't build trucks fast enough because their suppliers can't keep up."
New Tractor Orders Surging in 2018
Source: FTR
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Major truck OEMs such as Navistar, Daimler and Volvo and truck engine-maker Cummins each said they faced supply-chain problems earlier this year as the broader manufacturing sector coped with delays in supplier deliveries to factories.
"It doesn't matter if it's one tiny screw or one tiny hose, if it's missing or late, you can't complete the truck," said Magnus Koeck, vice president of marketing for Volvo's North America operation.
The good news is several sources say parts suppliers have ramped up hiring or used other methods to increase throughput.
"With the strong demand and the corresponding increases in production levels, the entire industry has been faced with supply constraints and pressure on delivery timing," Jeff Allen, senior vice president of operations and specialty vehicles at Daimler Trucks North America, said in an email to the Journal. "Recently we have begun seeing these constraints lifting and an overall improvement of the situation."
Still, "The situation is week to week," says FTR's Ake.
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