A recent announcement by a leading tire manufacturer to raise prices on commercial products comes “in response to the unparalleled rise of freight and operational costs, as well as the continued increase in the cost of raw materials,” Yokohama Tire Corp reportedly stated.
Although the cost of raw materials such as natural rubber reportedly waned in places such as Southeast Asia, steel has risen by upwards of 200 percent since 2020. Industry insiders predict that increased steel costs typically impact commercial tire products by about 10 percent.
The price increase is set to take effect on Nov. 1, making it the second time in one year Yokohama raised prices on commercial products. Yokohama is apparently not an outlier in terms of rising costs. Sumitomo Rubber North America also planned to hike prices on several brands by as much as 30 percent, effective Oct. 8.
“Dramatic increases in costs are driving the need for this price action,” Sumitomo officials reportedly said.
The surge in truck tire prices should come as no surprise, given that across-the-board costs escalations have transpired in recent months. Freight haulers have increased transportation costs, and container and logistics outfits have demanded outrageous rates in some cases. Fuel hovers around a 7-year-high, and economists indicate inflation could top a 30-year peak. Add a supply chain logjams that include upwards of 40 cargo ships anchored off the coast of California unable to unload, and it makes perfect sense commercial tire prices would spike.
But some industry insiders indicate that rising costs are more the result of increased demand than inflation and supply chain disruption. Reports from the U.S. Tire Manufacturers Association indicate 2021 commercial tire shipments surged by double-digit margins compared to 2020. Original equipment manufacturers (OEMs) project a 25.3 percent increase in tire shipments that is expected to reach 5.9 million by year’s end. In addition, replacement products are reportedly up 14.6 percent over 2020, with expected shipments exceeding 21.9 million.
It’s difficult to argue against the fact truckers have logged more miles and increased tire demand. The pandemic saw the FMCSA set aside hours-of-service restrictions and repeatedly renew the increased on-duty opportunities. Hours-of-service exemptions are largely still in effect.
Fleet operators, freight carriers, and owner-operators would be well-served to place truck tire orders ASAP. Tire makers appear to be prioritizing steer and drive products, which could result in fewer new trailer opportunities. Some believe that availability is not necessarily the central issue. The big headache may be getting the models truckers actually need.
New products that arrive at outlets appear to be moving faster than in years past, leaving inventories dangerously thin or non-existent. If supply chain hiccups finally lead to pronounced shortages, trucking industry professionals may need to plan accordingly and utilize retreads.
Source: truckinginfo.com
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