Truck and tank manufacturers are limiting orders and delaying equipment deliveries.
By Stephen Bennett
Trailer and tank manufacturers are coping with challenges as we kick off 2022. These include chassis allocations and longer lead times for materials and components, sometimes triggered by labor shortages. Together, these factors can result in not just higher costs and higher prices but also extended wait times for fulfillment of equipment orders placed by fuel transporters and fuel marketers.
“The supply of trucks is choked very significantly,” Jason Soulon, sales manager for Westmor Industries said. Baltimore, Maryland-based Westmor supplies its customers with a diverse group of product offerings used to store, transport and dispense petroleum, propane and other liquids and gases. “Those who need trucks into next year, and possibly into 2023, are going to be very challenged,” Soulon said. OEMs have set chassis allocations, allowing customers between 35% and 50% of what annual orders averaged over two or three years, Soulon said. For fuel transporters and marketers, that means, “If they do obtain a truck, it’s going to be at a very, very high price relative to pre-allocation days,” he said.
Trey Hill, owner of upfitter Oilmen’s Truck Tanks, in Spartanburg, S.C., said, “That seems to be pretty common across the industry, as most of the dealers have been placed on allocation.” And the impact is predictable. “That just kind of trickles down,” he said.
“Mainly where it’s showing up for us in our industry is in hiccups that have been experienced as far as trucks being delivered,” Hill said. “And the chip shortage has caused problems for the truck manufacturers, which has in turn delayed them being able to get the trucks to us in time to get the tanks and equipment onto those chassis. So, yes we’re experiencing that.”
To a lesser degree, some of Oilmen’s Truck Tanks’ equipment suppliers “have run into some problems,” Hill said. “But the trucks are the biggest challenge.”
John Pruchnicki, a partner in Coastal Carriers, a fuel carrier based in Ansonia, Connecticut, has been living with the tighter vehicles and tanks market. The carrier operates a fleet of about 35 trucks. At the lowest point of economic activity during the pandemic, roughly half of that equipment was “parked,” Pruchnicki said. As fuel demand and economic activity surged, Coastal brought that idled equipment back into service, and though it has ordered new equipment, it has been slower in arriving than before the pandemic. “A truck we were supposed to get two, three months ago—it’s coming in today,” Pruchnicki said on Nov. 29, 2021.
Manufacturers said the current conditions are likely to continue into next year. “The particular challenge we foresee in 2022 is marketers who are hoping to build a truck next year, a straight truck with a truck-mounted tank, may not be able to get that product because of the chassis allocation issue,” Westmor’s Soulon said.
Both materials and labor are tight.
“Raw materials have been tough,” Matt Niemeier, a vice president with MAC LTT, said. MAC Liquid Tank Trailer is a leading manufacturer of stainless steel and aluminum liquid tank trailers and trailer equipment. “Especially on the stainless [steel] side but aluminum as well. Our partners that do the aluminum extrusions have had a lot of challenges, primarily due to labor. We recently got a letter from one of them that they were struggling with manpower—as we are—and it’s creating lead time issues, supply issues.”
Niemeier continued, “Probably our biggest challenge has been staffing for people that fabricate and build.” In Northeast Ohio, where MAC LTT is based, skilled workers are at a premium. “There are a lot of jobs there,” Niemeier said. “There are a lot of good-paying jobs if you’re a skilled worker. We’re competing with a lot of companies for that same workforce.”
But he pointed to the bright side. “With all the struggles that everyone’s having with manpower, supply chain—the demand has been great. Customer demand for the product has stayed strong. I wouldn’t have predicted with the pandemic and everything that’s happened that the business would be this strong, but it’s been remarkable. The tank trailer, gas trailer industry has just flourished. We’ve got a lot of demand.”
Looking ahead, a company like MAC LTT, operating in the market it operates in, has a way to anticipate changes in demand, Niemeier added. Historically, there are indicators of what’s ahead, whether it’s going to be a slowdown or a pickup, he said. “We typically lag behind Class 8 truck sales, which are still strong. If we see that drop off, we typically know we’ve got a few months before we see the same thing. And even the [dry] van sales tend to trend up before us and down before us.”
Equipment specing processes tend to stay consistent and have for the most part continued to do so during the economic pickup of the past several months, according to manufacturers. The effect of the tight supply chain is that there is some buying of what’s available, some manufacturers acknowledged. “There’s been a lot of buying what dealers already have on the ground, what’s already in the pipeline,” Niemeier of MAC LTT said. “But we’ll build what the customer wants.”