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TRAILING BEHIND DEMAND
Page 50
Page 51
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A shortage of axles has left the trailer market in a mess, with long lead times and no signs of
recovery. Sharon Clancy finds out why.
THE OPERATOR'S VIEW
GE TIP Trailer Services bought 12,000 trailers from across Europe last year, so you would expect it to receive preferential treatment. Even so, Karl Davies, sourcing director, reports extended lead times. "Our historic order volume has helped us to achieve supply, but it is well short of what we need."
Davies confirms there is no end in sight to the current situation "Some trailer manufacturers are quoting quarter one and two next year for orders placed now. We are now placing orders for replacement fleet trailers well in advance of need."
Davies is offering customers waiting for long-term contract trailers production slots originally claimed for TIP Trailer Services' own short-term rental fleet.
As many readers will be aware, if you are ordering new trailers now, you will be lucky to see them in service before Easter. The trailer market has gone from being fairly orderly to having long lead times and unpredictable delivery dates.
There are warnings, too, that it will be increasingly hard to locate short-term rental trailers or serviceable secondhand ones, simply because there will not be enough available to satisfy demand.
So what's going on? Well, UK trailer builders have been caught up in an unprecedented demand for trailers around the world.As with vehicles, trailer manufacturing is now a global business and the major axle suppliers have plants around the world to supply different markets.That should mean there is a lot of capacity out there, so axle manufacturers would be expected to meet a demand surge in one market by sourcing axles from a plant supplying a different market. But that's not happening for various reasons.
"Rapid, unanticipated trailer market growth in Eastern and Southern Europe has been accompanied by high demand for trailers in China, a market traditionally dominated by rigid vehicles," explains Richard Thompson, general manager for ArvinMetitor's European trailer axle division, which has European axle manufacturing plants in South Wales, Italy and Spain.
German trailer builders and Germanybased axle manufacturers, such as BPW, have also had to contend with increased demand both from their home market and from Eastern Europe.
The demand for trailer axles has reached unprecedented levels this year, far outstripping the ability to supply. As a result delivery times have increased substantially,confirms Richard Gibbs, managing director of BPW's UK subsidiary.The company's annual review of the UK and Ireland trailer market put UK trailer sales in 2006 at 18,600, with BPW as the market leader with a 46% market share, followed by ArvinMeritor in second place, and DaimlerChrysler and SAF-Holland vying for third and fourth.
The axle manufacturers
In spite of what is currently perceived as an axle shortage. BPW will supply more trailer axles into the UK market this year than at any Lime in our history," points out Gibbs.
Nor are the trailer-axle manufacturers complacent about the current situation. ArvinMeritor, for example, is investing in increasing capacity by adding a new assembly line and robotised welding equipment."We are working diligently to solve any supply shortcomings and increase our capacity and efficiency globally and we will not stop this intensified manufacture and supply effort until our lead times are reduced," insists Thompson. "We will be working together with our existing customers on specifications and other parameters that will maximise our output to them."
There has been some suspicion among operators that because the UK market is very price-sensitive, our trailer builders are at the back of the queue when it comes to securing axle supplies. The trailer builders, however, report they are being treated with reasonable fairness, although there has been some grumbling about price hikes between ordering and delivery and the take-it-orleave it attitude from some suppliers. Understandably given the current situation, no one is prepared to go public on that.
Thompson is adamant that ArvinMeritor's UK customers are not being penalised." We're supplying to our customers based on their past demand level, not the price they are prepared to pay. We have heard that some trailer builders are being asked to pay increased prices for orders yet to be delivered, but we aren't levying any price increases on current orders.We're trying to be fair with the market."
The situation is unlikely to ease before 2008. The present levels of demand show no sign of diminishing and it is likely that the current delivery situation will continue well into next year," admits Gibbs. Thompson agrees:"We expect a continued strongerthan-normal demand for trailers at least through the next quarter, with average sales reaching a new level as the Eastern European market demand is absorbed."
The trailer builders
The speed at which the current situation has developed seems to have caught everyone on the hop. "At the beginning of January delivery times were four to six weeks. By the end of January. we were being quoted 30-week deliveries by some axle suppliers,says DonBur's sales director David Burton. Burton also points out that it's not just axles that are in short supply. "Supplies of wooden flooring are particularly acute."
The trailer builders are caught in the middle between delivery promises to customers and unpredictable delivery times from the axle suppliers. "Fortunately, operators are also well aware of the problems and wherever possible many, if not most. are adjusting their purchasing programmes to suit." says Paul Mead, sales and marketing director at Montracon.
Reefer manufacturer Gray &Adams traditionally pre-orders axles to meet anticipated customer demand, so it has been able to manage what director Peter Gray admits has been an ever-worsening situation during the y-ear."Instead of being able to order axles and expecting deliveries in four to six weeks, we are having to constantly monitor the situation. Customers are being understanding and some are prepared to be flexible on axle specification to ease delivery delays," he says.
Operator options are limited, because all the trailer manufacturers are in the same boat. "Solutions range from keeping your existing trailers for a little longer to purchasing goodquality used trailers and short-term rental," says Mead.
Burton advises operators buying trailers to increase their own capacity, and to plan ahead. -We think that supplies of short-term rental trailers and used trailers will dry up as companies try to manage their own needs.".