Everyone talks about the truck driver shortage, but how about the trailer shortage. There has been a huge surge in demand for Class 5 – 8 trucks, which then created a surge in trailer purchases. While OEMs who bring these products to market enjoy the benefits of a fatter bottom line and increased market share, the increased demand for related industries – from tires to engines and axles – are put under a strain.
With the economy showing increasing strength, components suppliers up and down the supply chain must adapt. It could very well be that the shortage becomes even more acute. Take windshields as one example. No matter what class a motor carrier’s commercial motor vehicle is, it will need a windshield. Mirrors and glass are required in large amounts throughout the manufacturing of a vehicle.
While an increase in demand of 5% to 10% might be absorbable by the industry, what if it increases to 15% or 20%? Only so much extra production can be gained from adding shifts, offering overtime, hiring additional workers, or otherwise. If the supply chain can’t handle the surge, where will the windshields and rear windows come from?
This has a knock-on effect with raw materials suppliers as well. Component and sub-component manufacturers use large amounts of raw materials. If the global economy continues to rise, we may see a shortage in raw materials. New investment and capital will be required in large amounts.
There is also a labor issue to consider. There is already a shortage of truck drivers. Employment shortages could follow. If the labor issue can be properly addressed, there are other considerations. Will the facility require expansion? Will new construction or acquisitions need to be planned and approved on by the executive board?
Some industry insiders are even thinking we could once again see something we haven’t seen in a long time: back orders for materials and equipment. We have seen surges like this before, but what does this one say about changes within the trucking industry?
What is a fleet manager to do to overcome procurement challenges?
Things to Keep in Mind
Motor carriers need to adapt to changes in the marketplace. Only nimble companies survive as the landscape shifts. One should never assume they don’t have to get a part until a corresponding part fails on a piece of equipment. It is critical that you plan for a replacement before the replacement happens. The last thing you need is a vehicle breaking down without having the part on hand because it is on backorder.
When sourcing trailers, it is recommended that motor carriers not assume the trailer model they want will still be commonly available when the need comes to replace it. Are you in communication with your dealer? Do you have an awareness of what is happening in the market? It never hurts to know ahead of time unit and component availability.
Even more, ensuring the proper parts have been sourced is as important as their availability. Have you done the proper research on sourcing for your tractor or trailer? Have you considered its lifecycle and type of service? Don’t hesitate to shop around if your dealer does not have the part or unit you need. There are usually financing options available if your trucking company doesn’t have immediate capital.
But what if the equipment is simply not available?
Trailer Orders Skyrocketing
Trucking research organization FTR has again increased its forecast for Class 8 tractor and trailer orders. They have referred to the crunch as a “capacity crises.” Their forecast calls for truck orders to hit 330,000 units and trailers to hit 334,000 units across North America.
Over the first quarter of 2018 truck orders sailed to over 41,000 units while trailers crested 46,000 units. The surging freight growth combined with lower overall industry productivity have created the current equipment procurement crunch. With many shippers having problems finding available trucks to haul their freight,
Initial freight models provided by FTR showed that the capacity crisis in equipment would not gain steam until later in the year. Yet the huge growth in the freight industry has put pressure on suppliers. A stronger economy continues to boost overall projections throughout the year. There are hopes that capacity utilization will ease later into the year, setting up for a better start to 2019.
Fortunately, trailer design continues to evolve. As new equipment comes on the scene, motor carriers will have more options. Consider solar panels as one example.
Solar Panels on a Trailer?
Have you heard? Solar panels on a trailer are now a thing. Once installed on a tractor’s air deflector, they could help keep batteries fully charged and healthy. Sure, solar panels make sense for sending power into electrical grids and powering buildings, but would they really work for a commercial motor vehicle? According to the North American Council for Freight Efficiency (NACFE), the answer is a resounding yes.
The main argument surrounds the cost and efficiency of solar panels. Solar panels can now pay for themselves within two to three years. Panels are also thin and flexible enough to be mounted on curved surfaces. Even more than just on roof air deflectors, solar panels could also be installed on tractor hoods.
There is a lot of room on van and reefer trailers where solar panels can be placed, but what will they be used for? The most obvious immediate use would be to charge batteries that are used for liftgates and pallet jacks. Liftgates use a lot of power in a very short amount of time. And since there are different sizes and applications, solar panels provide power flexibility. It can also be used to run refrigeration equipment, as needed.
Consider the application of trucks that operate on urban routes where distances between stops are too short for the vehicle’s alternator to keep a trailer’s batteries charged. Solar panels fix this problem by keeping liftgate batteries charged round the clock, regardless of application. It is important, however, to consider the panel’s output. Using solar panels on a trailer must be a carefully-planned out process.
The cost associated with a 300-watt solar panel installation usually runs anywhere from $1,500 to $2,500, depending on the style, brand, and application. A 300-watt panel can be expected to produce anywhere from 21 – 24 amperes, although real-world conditions could reduce that number by up to 25%.
During times of long, uninterrupted sunlight, you can expect that to come in at the higher end. Truck drives running with solar panels on their trailers can expect vastly different performance conditions from Phoenix to New England.
Solar power can also run electric HVAC systems in sleepers, which can help truckers reduce idling during overnight breaks, though this is the only real way their use translates into fuel savings. Curious about how you can expect solar panels to provide payback to your fleet? Check out NACFE’s payback calculator and a copy of their report by clicking or following this link.
How Will Tariffs Impact Trailer Orders?
When President Trump announced 25% tariffs on steel and 10% on aluminum, investors feared the worst. But what has transpired? This is specifically important for the trucking industry, who’s equipment relies heavily on raw materials like steel and aluminum.
Tariffs increase the costs of imported materials, which could potentially give domestic providers a better chance at competing. It will also lead to domestic producers raising their prices, which economists already see happening in the marketplace.
ACT Research has done some investigating and determined that the increase costs for tariffs could come in at around $1,000 per vehicle and $900 per trailer. That amount could fluctuate depending on the amounts of raw materials that go into making various types of vans, flatbeds and other trailers.
The metals market is very complex. While China is the world’s largest producer of primary aluminum and steel, China consumes most of that material itself as it builds up its market at home and exports products abroad.
The U.S. buys many products from China, but it does not buy aluminum from them. In fact, the U.S. buys nearly half of its aluminum from Canada, with Russia coming in third at 11%. Metals production has shifted north to Canada as a direct result of low electricity rates there. Processing primary metals is a very electricity-intensive process.
The fact is, we have yet to see if the tariffs have a lasting impact on trailer supplies. Right now, the market is keeping up, but there is already talk of potential backlogs and bottlenecks, both at production and at the dealership. Can the transportation industry keep up with the growth and provide fleets with a way to move freight around the country? We will have to take a wait-and-see approach.