"(2023) was a bit of a reset year. ...," Besancon said.
"We had had so many things happening, you know, with various shipping issues, and, let's not forget, a couple of years earlier, we had shortages. Everybody caught up, and I think last year was really, particularly with the dealers and distributors, making sure they had the right inventory levels.
"We've gone through numerous crazy freight rates, things like that. And we thought we were getting to a period of normalization, and we did for about six months. And then everybody was like, 'OK, now let's make sure that we're looking at all our inventory levels and making sure we're set at the right level.' And so with that, we saw a little bit of a dip in business, which is why I call it a reset."
Chris Rhoades, BKT USA Inc.'s vice president for the medium and large OTR sector, tracked the high inventories back to shortages during the COVID pandemic.
"We had solid production shipments the whole time, both in ag and MTR. So we were constantly filling all the orders and keeping everything in stock. Other manufacturers, due to COVID, had pulled back production. And what happened is at the end of 2022, and even before that, all of a sudden, all of those orders hit the dealers from multiple manufacturers. So all of a sudden it was, you know, famine, famine, famine and then just overfilled. So we tried to approach it differently, even to our own cost," he said.
"Something similar happened where the first four months (2023) were very slow because of the high-priced inventory with all the dealers and distributors," added Minoo Mehta, managing director of BKT USA.
"And it took time to stabilize the freight rates coming down every month. Pricing was the most important thing, which made the people a little nervous about buying new products because they didn't know where it would stabilize, But they did buy whatever was necessary. But after June, things started picking up, and we recovered all the lost sales of the first four months," Mehta said.
Besancon noted just as most tire factories caught up with demand, the industry was impacted by the Red Sea shipping disruptions.
"So that kind of put a little bit of a damper on some things and created another little bit of a logistics hiccup," Besancon said.
"If you believe in God, God doesn't want the tire industry to go smoothly," Mehta joked.
"Overall, the market last year was tough due to a lot of our dealers starting out with excess of inventories. So many of our largest dealers were going through inventory reduction programs," he said.
While the Canadian market was booming, according to Ryan Loethen, president of CEAT Specialty Tire Inc., "the U.S. was a bit mixed. I think what we saw in the U.S. is kind of a mixture of uncertainty about the economy, and people not wanting to go out and invest, for sure. There was a glut of tires in the market.
"So it was, I wouldn't say necessarily it was a down year. We experienced growth, but not at the same rate we had in 2021 or 2022."
He noted that in the past, small and regional tire dealerships would maintain a stock of tires due to scarcity.
"I didn't see that last year. I saw them relying on the wholesalers and wanting the wholesalers to maintain inventory, and they take (tires) just-in-time. ... So for all the wholesalers, inventory really crept up, while the regional tire retail guys, the guys that bolt on, their inventory went significantly down because they were relying on that just-in-time from the wholesalers.
"Well, in this market, when there's a glut, that was possible to do it last year. (This) year, I don't think that's going to be quite possible based on what I've seen, at least in the winds at least," Loethen said.