The COVID-19 pandemic increased consumer demand for door-step delivery at an incredible speed, and it has presented an opportunity for tire dealers and tire manufacturers as delivery fleets running super-regional routes look for more efficient ways to operate.
In the long journey a product takes to reach a customer's front door, it's the last mile of delivery that accounts for more than half of the total cost of shipping — 53% of the total shipping cost in 2019, according to data research firm Mordor Intelligence.
The vehicles that complete the journey — and the tires — endure all types of roads and weather, frequent stops and starts, and long idle times.
The reason the last mile is so expensive is because it also is the most time-consuming. Unlike much of the journey along the supply chain — a line from Point A to Point B — final-mile delivery consists of multiple points at slower speeds, having to contend with traffic on city roads and constant stopping.
Delivery trucks use 0.84 gallons of diesel fuel per hour just idling the engine, according to Argonne National Laboratory data.
Despite the costs — especially with consumers demanding cheap or free shipping — e-commerce sales continue to grow. In the second quarter of 2020, while total U.S. retail sales were down 3.5% from 2019, e-commerce sales increased 44.5% over 2019, recent U.S. Census Bureau data show.
In 2015, e-commerce sales made up 7.2% of total U.S. retail sales. In the fourth quarter of 2020, it represented 14%, according to the Census Bureau.
"The dramatic drop seen in commuting patterns, greater reliance on e-commerce and demand for last-mile delivery services, will remain significant factors in shaping mobility," U.S. Tire Manufacturers Association (USTMA) claimed in its recent economic outlook.
Despite the effect of the pandemic, shipments of light and medium truck/bus tires rose during 2020 by 400,000 and 300,000 units, respectively, over 2019, according to Tire Business and USTMA data.
Last-mile routes are rough, and the tires need to be diverse. The tires need to be durable to stand up to the city road abuse, provide all-weather traction and solid wet-braking. The tires also need to go on the highway, have good fuel economy and have a longer lifespan.
"These final mile routes are brutal, just a ton of starting, stopping, turning, impacts, running into curbs," Gary Schroeder, executive director of global truck and bus tire business at Cooper Tire & Rubber Co., said while addressing changing trends in the industry earlier this year.
He noted that tires are a big part of the operational costs, as trucks need two to four new sets a year.
While the 22.5-inch size continues to be the most popular medium truck tire size, the 19.5-inch is trending.
Last year, tire size 225/70R19.5 was the third-most popular original equipment fitmet size in the medium truck tire category, according to USTMA data. The size's popularity among OE manufacturers is 11.7% of the market, up 3% over 2019.
"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.