Suppliers Detail Supply Chain Challenges
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Leaders of commercial vehicle suppliers weighed in, during recent earnings calls, on challenges to the supply chain and related concerns.
Tom Linebarger, chairman and CEO of engine maker Cummins Inc., noted the coronavirus variant omicron has driven up its own absenteeism as well as that of its suppliers.
“But if I step back though, chip supply is still a disaster,” he said. “I mean, it just moves around. Lately, the biggest thing I am hearing about is anti-lock brakes, which, as you know, don’t affect us. But essentially every one of our customers and car companies are all suffering from anti-lock brake chip shortages.”
Linebarger
Federal Motor Vehicle Safety Standard No. 121 stipulates anti-lock braking systems have been required on tractors manufactured on or after March 1, 1997, and air-braked semi-trailers and single-unit trucks manufactured on or after March 1, 1998.
Cummins supplied Class 8 engines, 10 liters and above, to all U.S. truck makers in 2021. That amounted to 49,496 engines, Wards Intelligence reported. Cummins also supplied a leading 19,152 Class 8 engines under 10 liters.
Carl Anderson, chief financial officer at Meritor Inc., said, “In total, higher steel and freight costs were around an $84 million headwind in 2021.”
Ocean container cost nearly quadrupled, hot roll steel increased over 250% and scrap cost doubled, he said.
“I don’t know if we’ll climb all the way back,” Anderson added, “but I would say we should definitely see a $50 million-plus improvement in working capital and on a year-over-year basis.”
Arnold
Eaton Corp. Chairman and CEO Craig Arnold said inflation can’t be ignored and is likely to persist in 2022.
“Essentially, improved copper [higher conductivity and ductility] is up, resin costs are still high,” Arnold said. “The cost of semiconductors, if you can get them, is up dramatically. Steel is the one kind of good guy right now, but there are more than enough other, bad guys out there in terms of what we’re still seeing inflation that is offsetting the benefits that we’re going to see from steel.”
As for copper, an agreement calls for reducing copper in brake pads to 0.5% by 2025, after reducing it to less than 5% by weight in 2021.
On Jan. 21, 2015, the Environmental Protection Agency, states and the automotive industry signed an agreement to reduce the use of copper and other materials in motor vehicle brake pads.
In addition to copper, this voluntary initiative reduced mercury, lead, cadmium, asbestiform fibers and chromium 6 salts in motor vehicle brake pads.
The initiative will decrease runoff of these materials from roads into the nation’s streams, rivers and lakes. EPA pointed out copper is a primary pollutant of concern found in highway stormwater runoff.
Amid these challenges, a historic advance for heavy-duty truck sales was announced.
Autonomous technology developer Embark Trucks Inc. launched its Truck Transfer Program with Knight-Swift — through which the carrier will directly own and maintain an Embark-equipped autonomous truck, deploying it with only its own driver in the cab.
We're excited to launch the Truck Transfer Program, an industry-first initiative to place Embark technology in the hands of Knight-Swift drivers. This marks the first time that a carrier will directly own & maintain Embark-equipped trucks.
Press Release:https://t.co/0PnsP6Khvy — Embark (@embarktrucks) February 8, 2022
“The Embark Universal Interface enables carriers to select their preferred OEM. In the case of the truck transfer program, Knight-Swift has selected the Kenworth T680,” an Embark spokesperson told Transport Topics.
Embark plans to equip a set of Knight-Swift trucks from the carrier’s slated 2022 OEM deliveries.
The trucks will come with Embark’s latest sensor and compute stack, which is then integrated with an OEM platform’s electronically controllable braking, steering and throttle, as well as power, chassis, telematics and HVAC.
“Our platform integrates with the Kenworth OEM and Tier 1 components for steering, braking and throttle, all of which are being progressed through the process to full redundancy,” the spokesperson added.
Embark and Knight-Swift intend to collect detailed driver feedback on the technology’s performance, define how the system will improve driver jobs, and develop procedures and tools that enable Knight-Swift to maintain, inspect, dispatch and remotely monitor Embark-equipped trucks, according to San Francisco-based Embark.
Knight-Swift Transportation Holdings Inc. ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It ranks No. 1 on the TT list of the top truckload dedicated carriers.
Embark Trucks is a subsidiary of publicly traded Embark Technology Inc.
A fourth-quarter survey by financial firm Cowen reported 54% of those open to testing autonomous trucks plan to use a third party for autonomous capabilities compared with 52% in the third quarter, and 46% plan to own an autonomous truck in the next five years compared with 48% in the third quarter.
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