Walt Weller, senior vice president of CMA/Double Coin, was one of a few select tire industry executives asked by Modern Tire Dealer magazine to provide insights into the state of the commercial tire market. Here are his comments which were included in a June story in the tire trade publication entitled “Tough Road To Travel.”
MTD: What are the biggest challenges facing the truck tire manufacturers right now and why?
Weller: 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.
MTD: Do you foresee current challenges turning around or correcting themselves during the second half of the year?
Weller: Unfortunately, we do not unless there is a sudden change in demand. Given the current state of affairs and the current economic climate, we believe this could last well into 2023. The added complexity of the COVID-19 shutdown in Shanghai, China, and its effect of an already-stressed logistics system is the main culprit. Having said that, Federal Reserve interest rate hikes may slow the market. It’s something to watch very carefully.
MTD: What’s your advice to commercial truck tire dealers in the meantime? What should they prepare for?
Weller: Nothing really different than what we see most dealers doing at the moment. Be vigilant, plan for extended lead times – 30 to 60 days extra and maybe more – and be in constant communication with your suppliers, as well as your customers.