The supply chain issues and material shortages that have hampered the production of trucks and trailers this year are unlikely to be resolved soon.
During its State of the Freight series in September, FTR Vice President of Commercial Vehicles, Don Ake said, “there are no reliable signs that would allow anyone to predict when there will be any relief in the supply chain.”
The semiconductor shortages caused an extraordinary increase of unfinished commercial vehicles. Manufacturers have cut production, and many unfinished tractors and trailers sit in lots. FTR estimates 20,000 red-tag units—assembled units that are lacking one or more components—across OEMs. At the same time, orders for new vehicles have been in the 23,000 to 28,000 range for the last six months.
According to ACT Research, North American production of Class 8 trucks sank this summer to its lowest level since May 2020. Equipment makers built 14,920 units in last month, while the backlog of trucks ordered but not built nearly tripled from the same month a year ago, to 262,100.
Companies pushing to expand capacity to meet strong freight demand, ordered 36,900 heavy-duty trucks in August. It was the highest level in five months, and up 90% from the prior-year period, according to figures from ACT.
On its earnings call last month, Daimler Truck Group said it opened its order book for 2022 to record orders in the first few days. Book-to-bill was 156%, and September marked the second highest order intake month in the company’s history.
But it is not just semiconductors causing issues. Wiring harnesses, truck tires, mirrors, and parts made of plastic held up in global shipping bottlenecks are crimping availability. The tight labor market is also affecting domestic suppliers that make everything from small components to truck trailers.
"These [shortages] are going to keep the OEM build rates elevated into 2023 and maybe into 2024," Ake said. "We're in catch-up mode and we're going to be in catch-up mode for a while."
Truck production is currently running at a monthly deficit of more than 11,000 units compared to maximum production potential, while trailers are at a deficit of almost 9,000 per month.
Looking into the next two to three years, there was already pent-up demand for trucks and trailers as the economy restarted from the pandemic. That demand has grown exponentially with consumer spending and the supply chain crisis.
FTR forecasts U.S. Class 8 (33,000+ lb. GVWR) truck deliveries to reach 274,000 this year before jumping to 335,000 next year and 360,000 in 2023. With the current backlog of orders, and new orders coming in daily, it is not expected for the industry to catch up with demand until 2023 and possibly into 2024.
This poses an issue for companies that need to get products to customers and stay in business. Providers like Ryder, which is one of the largest commercial truck buyers in the country, can help. The company is also feeling the effects of the truck production crisis, because of its purchasing power, Ryder has slots with OEMs ensuring the company vehicles for its customers as they are produced. Additionally, Ryder can provide companies vehicles from its rental and used truck fleet, as they wait for the delivery of new vehicles.