Truck buyers, large and small fleets included, are becoming increasingly frustrated over the supply chain challenges facing all truck makers, primarily as a result of a global semiconductor shortage, reports James Menzies of Today’s Trucking.
“It has been challenging from a business planning perspective,” a frustrated Mike Crough of Ennismore, Ont.-based arborist Treescape Canada, told TT. Crough made a major investment in a $600,000 Mack TerraPro, which was supposed to arrive in April, but has since been delayed because of worldwide supply shortages.
“We are constantly pricing work for this truck and being cautionary with regards to what we promise. But even our cautionary approach has had us farming out some of the work we received to competitors or bringing in subcontractors to do the work, because we have to take care of the customer.”
Alain Bedard, chairman and CEO of Canada’s largest fleet, TFI International, voiced his displeasure with the supply chain crunch to analysts during a call to discuss third quarter earnings.
“Maintenance costs are creeping up,” he said, “because we don’t have the equipment we need to bring those costs down.”
He said TFI International wanted 1,000 trucks for its U.S. LTL division, but has only been promised 500 through the first quarter of next year. It wanted 3,000 in total for truckload and LTL operations in the U.S., and only received commitments for 2,000. He was promised 165 trucks by the end of October but only about 100 arrived.
Said Titanium Transportation CEO Ted Daniel:
“You can’t call up your Class 8 truck supplier and say ‘I want 200 trucks next year’ and they’re going to deliver them to you ahead of schedule,” he acknowledged. “They’re going to tell you ‘That’s great, now let me figure out if you’re going to get 100, 120, or 80 of these 200 you require’.”
He said one trailer manufacturer recently told him it had more than 5,000 orders in the queue and will only be able to deliver 1,000 to 1,500.
Fleets unable to procure new iron are seeing maintenance costs climb as they extend trade cycles.
“Our fleet is aging quicker than we’d like, because we can’t find the equipment we need,” said Titanium chief financial officer Alex Fu on a call with analysts. “We are keeping trucks and trailers on the road longer than expected. It is a cost of running the business right now.”
There are few short-term solutions. Used truck prices have spiked and inventories are depleted.
“We have a lot of [unfinished] trucks parked,” John O’Leary, CEO of DTNA told a group of trucking journalists Nov. 11. “I can’t disclose the figure but it’s a big number. We could’ve shut down and not built those trucks and we would’ve saved a lot of money in cash tied up in balance sheets and the logistics costs of keeping plants open building vehicles we can’t deliver, but we made the conscious effort to build those trucks so that when we do get one or two chips, which is all we are missing, we can immediately turn them over into a sold status and get them to the customer. We feel it’s the best thing we can do for customers.”
O’Leary said an effort is also being put forth to be transparent and honest with customers about delivery timelines.
“We try to tell them the absolute truth,” he said. “The easiest thing in the world is to tell them ‘I’ll be able to put in the order, and in six months you’ll get your truck.’ If I know that to be the truth, I’ll tell them that.”
Full Today’s Trucking article here.