FULLERTON, Calif. (Jan. 3, 2012) — Commercial tire demand in the U.S. should increase slightly over 2012, according to Yokohama Tire Corp.'s director of commercial sales, as the industry achieves more supply-demand equilibrium to keep pace with a recovering economy.
Yokohama's assessment of the market parallels that of the Rubber Manufacturers Association, which is forecasting aftermarket truck tire shipments this year will rise about 2 percent, to 16.3 million units, based on what the RMA termed a "sluggish" forecast for Industrial Production Index.
Shipments in 2012 fell about 5 percent, the RMA said, as fleets opted to upgrade their rolling stock; that trend, however, led to a jump in OE truck tire shipments last year of more than 5 percent to 5.2 million units.
For 2014 and beyond, Yokohama expects replacement market demand for truck tires to pick up again significantly, according to Rick Phillips, who's been the company's top truck tire executive since January 2011.
As for 2013, "..freight and GDP are pretty tightly tied together… Right now, GDP growth is not great but it's enough to challenge the capacity," he said. "There's a good bit of money on the sidelines, but still a lot of uncertainty so spending is very cautious."
Mr. Phillips pointed to the housing industry as one economy segment that's starting to show signs of recovery. He also singled out the recovery efforts on the East Coast in the wake of Hurricane Sandy, which should help the trucking industry recover from lost revenue attributed to the storm of as much as $140 million a day.
"Hopefully, we will continue to see more good signs than bad," he said in comments made before Congress passed the stop-gap bill Jan. 2 to stave off the fiscal cliff package of tax increases and spending cuts.
Mr. Phillips' forecast contrasts with his assessment of the industry the past two years, which he characterized as "challenging" and "surprising."
"In the 35 years I've been in the industry, I've never seen two years back to back that were as different as 2011 and 2012," he said, referring to an "unpredicted swing" in supply and demand and swings in the price of raw materials.
In 2011, he said, the industry experienced a bigger spike in recovery from the 2011 recessionary conditions than it had expected, which collided with tight supply to create product shortages throughout the industry, despite rising prices tied to raw materials cost escalation throughout the year.
"In 2012, it all switched," he said. "We saw demand slow down considerably, which caused inventories to build, and the price of raw materials reversed course and decreased."
Despite the swings, YTC fared well in both years, Mr. Phillips said, gaining market share in 2011 and 2012 by focusing on servicing its customers. Mr. Phillips said servicing customers is one aspect of business a company can control, and to that end Yokohama has empowered its employees who have direct contact with customers to "make decisions that add value" to the company's relationship with customers.
Looking at the trucking industry in general, Mr. Phillips the No. 1 concern among fleets is the shortage of qualified drivers, especially as the economy recovers and trucking demand picks up again. The industry also is dealing with increased regulatory issues as the Compliance, Safety and Accountability and Hours of Service.
As for tires themselves, Mr. Phillips said YTC sees fuel efficiency and proper inflation as key issues.
"…the key (to higher fuel mileage) is trying to make tires that are truly fuel efficient without sacrificing mileage and retreadability," he said. "We rely on our technology to accomplish just that without sacrificing the other elements."
Yokohama has 10 tires—four steer, three drive and three trailer tires--that are verified as fuel-saving technology under the Environmental Protection Agency's SmartWay program.
In its efforts to help fleets and owner-operators keep an eye on proper inflation, YTC developed a web-based tool that calculates the correct inflation pressure by entering the tire information and load weights by axle.