However, today’s tire shortage is not restricted to trucks and trailers. There is also a global shortage of construction equipment tires that started last year and will probably continue until late 2007. In particular, there is a severe shortage of large and medium-size off-road tires, especially 25-, 33-, and 49-inch tires, caused by surging construction demand in the U.S., China, and Iraq. The Impact of the Tire Shortage on Fleets
The tire shortage is impacting commercial fleets in three ways: 1. Difficulty Getting the Tire Brand Ordered.
Truck OEMs are struggling to get proper allocations of tires from tire manufac-turers, said Mark Stumne, senior truck application engineer for GE Commercial Finance Fleet Services. “The result is that fleets order trucks with a specific brand and model of tire and receive a truck with different tires than ordered. In many cases, they are receiving trucks with a mix of tire brands. For example, the front tires may be brand X and rear axles are brand Y or they receive a different model/tread design. However, the OEMs are matching traction/highway treads requested and the tires are of the proper size and load range,” added Stumne. “This can be an issue for truck fleets that have a specific tire maker recapping program or other tire manufacturer programs for their fleet.” For fleets that want to wait for a specific brand of tire, the tire shortage has lengthened production lead times. “But most of our clients are willing to change brands in order to get their trucks built,” said Dave Decker, manager of truck engineering for Wheels Inc. Although there is a shortage of medium truck tire availability for new builds, this is not the case for vehicles already in service. “Tire manufacturers may have narrow margins built into their deals with the OEMs. As a result, some tire companies might try to shift their sales away from the OEMs to retail sales to increase their profitability,” said Ron Dapkunas, director of customer and vehicles services for PHH Arval. “In response, some truck manufacturers are telling customers that they can't commit to a particular tire brand and the customer may have to acknowledge at the time of the order that they will accept a substitute brand if what they order isn't available at the time of build. As for tire availability at the retail level, we aren't hearing that there are any issues in getting what we request.” 2. Spare Tire Shortage.
Spare tires are optional on all trucks and must be selected if required. “When selecting a spare tire, some truck OEMs are only supplying a wheel without a tire,” said Stumne. “Often the customer must source a tire after delivery. The OEMs are doing so to ensure they have enough tires to supply the trucks coming off the assembly lines.” 3. Shortage is Prompting Price Increases.
In conjunction with the tire shortage, fleets have experienced numerous price increases from the major tire manufacturers since the first of the year, said Decker. Still a Manageable Problem
Despite these problems, the medium truck tire shortage has been manageable for most fleets. “In most cases, an alternative tire brand has been selected – at extra cost unfortunately – to ensure a shorter lead time,” said Ken Gillies, director of truck services for Donlen Corporation. “Customers have not done much manufacturer ‘brand hopping’ with the hopes of a competitor having better tire selection and availability. As with any component for a truck, if one manufacturer is challenged by it, most all are either currently dealing with it or will be shortly.” Gillies believes the medium truck tire shortage is a short-term problem. “In another 15 months, the tire manufacturers will most likely have the opposite problem – overcapacity – as the 2007 build starts and fleets delay truck purchases in the hopes that someone else will sort out the early model-year emission problems.” But others say the tire shortage may potentially have a more long-term impact. “Although the problem today is manageable, I do believe that it is a situation that could cause some real problems down the road,” said Mike Corchin, manager of truck business development for Wheels Inc. Let me know what you think. firstname.lastname@example.org