Trailer Makers Say Tire Shortage Is Resulting in Large Price Spikes

This story appears in the Sept. 6 print edition of Transport Topics.

Trailer manufacturers say they are having problems finding enough tires to meet the surge in equipment orders, forcing them to take stiff price increases and offer customers less familiar tire brands.

Tire producers, meanwhile, said they weren’t prepared for the jump in demand, with some reporting their orders this year have been up to 400% more than 2009 levels.

Among the trailer makers noting the tire shortage were Great Dane Trailers, Utility Trailer Manufacturing Co., Hyundai Translead, Vanguard National Trailer Corp. and Stoughton Trailers.

“Tire supplies are very tight right now,” Craig Bennett, Utility’s senior vice president, sales and marketing, told Transport Topics.

“We’re having real trouble getting enough from our regular suppliers and have had to go to other tire makers. But then we have to be extremely careful to get the same quality,” Bennett added.

Truck manufacturers and dealers said the tire shortage has not extended to them.

ACT Research Co. reported that new trailer orders rebounded aggressively in the second quarter of this year, with orders jumping 165% in April over the corresponding month last year, and 74% in July (click here for previous story).

Mike Cobb, sales manager for dry van producer Vanguard, said he has had to rework his entire tire supply.

“Our usual suppliers told us they couldn’t help us for the rest of the year, and we had to quickly find a supplier that was not among our standard brands . . . we could do it only because of our Asian ties,” Cobb told TT.

Vanguard is a subsidiary of China International Marine Containers Ltd.

“We were able to get the tires we needed from Hankook Tires, and though it’s a quality tire, it’s been a difficult time,” Cobb said. Hankook is based in Korea.

“I’m spending much of my time going to customers and changing orders,” Cobb said. “We have found reasonable acceptance of Hankook, though some customers have preferred our other suppliers.”

Several tire manufacturers agreed there was a shortage of tires for trailer manufacturers.

“We’ve seen a huge, sudden upswing in tire demand, especially from trailer makers,” John Cooney, director of commercial sales at Yokohama Tire Corp., told TT. “Our numbers are up nearly 400% from last year.”

Cooney said commercial tire demand, especially for trailers, was seasonal, with the heaviest demand during spring and summer.

“We use the slow periods of January through March to build up inventory for what we expect the year to be like, and there was no way that any tire executive could have gone to his superiors last year and asked for a 400% increase in production,” Cooney explained.

“We’ve been calling back workers, adding shifts, working at full capacity, but we can’t sustain this level of increase, and there will inevitably be spot shortages, especially at the trailer [original equipment] level,” he said.

Don Darden, spokesman for Bridgestone Americas Tire Operations, also acknowledged the tire shortage.

“Recently, the North American commercial truck tire market has experienced a sharp increase in demand, particularly with OE tractor and trailer manufacturers,” Darden said.

“Because of this situation, supply has been limited for truck and bus radials to some of our customers,” Darden said.

Glenn Harney, chief operating officer of Hyundai Translead, said that his company did not have problems getting enough tires, but couldn’t buy the tires it wanted.

“We did have a manufacturer tell us that he would not be able to get us anywhere near the number of tires this year as before,” Harney said. “They were oversold.” He declined to name the brand.

Other trailer makers said they were not hit as hard.

“Great Dane has not felt the effects of this supply shortage because of the strong relationships we have with our suppliers,” Brandie Fuller, Great Dane’s vice president of marketing, told TT.

Fuller added, “Our procurement group [said] indeed there is a tire-supply issue within our industry,” and “the short supply and strong demand are supporting price increases. We are continuing to see suppliers making announcements about these price increases.”

All other trailer manufacturers said they were receiving notices of stiff increases but did not say how high prices could climb.

“Tire prices have been going up all year, and they could continue to go up,” Ken Wahlin, president of Stoughton Trailers, told TT. He declined to give a figure.

“There is a little bit of tightness in the tire market right now,” Wahlin said. “We use a number of brands and one of them

has not been able to deliver as in the past.” He declined to name the brand.

Wes Garber, director of original equipment sales for Continental Truck Tire the Americas, said the company has seen an increase in business from firms unable to get tires elsewhere.

“Trailer manufacturers have been calling us to discuss adding us as their standard equipment when we didn’t previously have the standard position,” Garber told TT. “We have also seen an increase in volume coming from our long-term original equipment customers.”

However, Continental has not been able to meet all requests.

“While we would love to fill each and every request for tires from all commercial vehicle truck tire consumers, we have turned away some orders,” Garber said.