Evolving delivery trends good for CV tire sector — Cooper exec

FINDLAY, Ohio — Tariffs, "last mile" delivery and the emergence of smart technologies are among trends that will impact the commercial trucking business for years to come, Cooper Tire & Rubber Co.'s Gary Schroeder told those attending K&M Tire Inc.'s virtual dealer conference.

Understanding industry changes and trends can help tire dealers find opportunity, Mr. Schroeder, executive director of Cooper's global truck and bus tire business, said during a presentation at "Keep on Rollin' 2021," wholesaler K&M Tire's virtual dealer conference held Jan. 20-21.

"I think 2020 has really shown how important the trucking industry is to our country," he said.

He said with all of the increase in demand placed on the trucking industry, the sector "really didn't skip a beat."

Tariffs

The U.S. market for new commercial tires is around 26 million units, about 55% of which are produced domestically.

"When you kind of break down the truck tire market, about half of them are sold through a replacement channel," he said. "The other half is sold through national account programs directly to fleets, to original equipment manufacturers (OEM) and, to a small extent, the government."

He said most of the national accounts, OEM and government tires are sourced from companies within the U.S., which means most of the import tires are being sold in the aftermarket.

"We hear all of this talk about tariffs, and if tariffs continue to stay in place, or they grow, … it could present a very challenging environment."

Super Regional routes

Changes in trucking over the last few years have boosted "super regional" routes among trucking companies. Mr. Schroeder pointed to the use of electronic logging devices (ELDs), hour/service regulation changes and driver shortages for this growth.

"A super regional route is becoming bigger and bigger. It addresses a number of these things," he said.

Having a regional route also is less stressful on a driver and his or her family than multi-day long hauls.

"It allows drivers to spend more nights at home, and you're able to attract more people to this occupation," he said.

He added more Class 8 trucks are being produced with automatic transmissions, which further opens up the talent pool to find new drivers.

Super Regional tires are sort of a cross between long-haul and regional applications. Super Regional tires are designed to handle highway and street miles.

When talking about Cooper's super regional tire, the Cooper Work AWD, he noted most super-regional tires don't have a lot of void, partly because the tread depth is shorter than a long-haul tire, but also because there is siping throughout the tire, and a shallower tread depth is needed to make the tire more durable.

"I think you're going to see more and more tire manufacturers coming out with this super-regional type tire to fit this application."

Last mile

"If you're not in the 19.5 [inch] business, I recommend taking a very hard look at getting into it, because it's going to grow like crazy," Mr. Schroeder said, referring to truck tires with 19.5-inch rim diameters.

As more people are ordering products online, delivery demand has spiked and the last mile of delivery is playing a much more important role in the process.

"Almost half of the supply chain cost to get a good from a manufacturer to your home is in that final mile," he said. "Freight companies are going to be looking very, very hard at how they reduce the cost of that final mile delivery."

And tires are a big part of the operational costs; trucks need two to four new sets a year, he said.

"These final mile routes are brutal; just a ton of starting, stopping, turning, impacts, running into curbs, … " he said. "Also, traction is very important."

He said delivery companies are looking for that tire that can stand up to the abuse and give "a decent amount of mileage."

Other trends to watch

SMART tech: Smart tires are an emerging trend that still is taking shape and probably years away from a "real standard," Mr. Schroeder said. There are a lot of companies out there creating interesting technologies to help commercial tires operate safer and more efficient.

Infrastructure: If the government moves forward and develops a large-scale infrastructure bill, it would be a boon for the trucking industry for decades, he said.

"All of this work is going to require equipment to move, raw materials to move, and they're going to have to move by truck."

Electric vehicles: The popularity of electric vehicles will also continue to grow, especially in the commercial market, Mr. Schroeder said. He noted Freightliner Trucks, a division of Daimler Trucks North America L.L.C., and Paccar Inc. both have electric Class A vehicles on the market, and there are smaller start-ups like Nikola and Tesla emerging.

The market for electric "last mile" delivery trucks really is going to grow, too, he said.

The biggest challenge for the tire industry, he said, will be developing the type of tires that can handle the torque an electric vehicle puts out at the start.

Capacity: The last trend, Mr. Schroeder mentioned, is about U.S. tire capacity. With a majority of commercial replacement tires coming from imports, he wonders what impact tariffs will have on prices and availability, or if more importers will decide to set up some of its production in U.S.

"I think this is a real serious issue that we're facing today, and we'll be watching very, very closely," he said.