Several factors are influencing the state of the commercial tire market this year. Trade issues between the U.S. and China, new products, record Class 8 demand, vehicle electrification, record-high production levels, increases in last-mile deliveries, and more are all impacting truck tires in 2019.
State of the Commercial Truck Tire Market
There have been several ups and downs in the commercial truck tire market over the past year.
“One difficulty in the industry is trading between the U.S. and China. Those in the auto industry not prepared for this have been affected. Those who prepared have ways to avert the sourcing channels to not collide with the trade agreements and tax issues,” said Rob Williams, senior director of TBR sales for Hankook Tire America. “There is also the opinion that this situation could be an opportunity for second-tier manufacturers in the U.S. market.”
The anti-dumping duties and Section 301 tariffs on Chinese truck tire manufacturers are having a significant impact.
“The combined duties/tariffs result in an additional 69% to the cost of a truck tire imported from China. The additional cost has caused many Chinese manufacturers to abandon the U.S. market. Some of this production was replaced by imports from Vietnam, Thailand, and India. The surge in imports from China to beat the tariffs in the fourth quarter of 2018 also created an industry surplus of imported tires during the first half of 2019,” said Walt Weller, SVP of CMA, LLC. “Additionally, the tariffs on all Chinese products has caused a reduction of Chinese imports to the US and a trickledown effect on freight tonnage and truck tire demand in the replacement market.”
An important factor is supply and demand.
“The story of the 2019 truck market goes back to the end of 2018 when tariff increases on Chinese-produced truck tires were announced. This led to an influx of inventory from Chinese importers to beat the increase in tariffs and duties. The inventory influx, as well as the strength in the OE market for new vehicles, has diminished the need for RT sell in units in 2019,” said Justin Brock, marketing manager- Construction & Tweel for Michelin North America.
The commercial tire segment remains very competitive.
“Demand for commercial original equipment (OE) tires has shown some improvement in 2019 versus 2018, but we have begun to see clear indications of a slowing OE market. We expect the commercial OE market to be down in 2020 and the replacement industry to deliver single-digit growth versus the prior year,” said Ben Johnson, director of marketing, truck and bus radial, U.S. and Canada, Bridgestone Americas Tire Operations (BATO).
The increasing demand is impacting tire sizes.
“The increasing demand in this segment of commercial LT tires that have a higher carrying capacity, higher speed ratings, and superior fuel economy and retreadabilty in 17.5- to 19.5-inch wheel diameters,” Weller added.
Record sales are also a factor, but they are not predicted to last forever.
“From the beginning of 2018 through the first half of 2019, the demand from Class 8 manufacturers has been at record levels. New forecasting has indicated a shift on the horizon and now point to it going in the other direction,” said Tom Clauer, senior manager of commercial and OTR product planning for Yokohama. “Class 8 OE tire suppliers may begin experiencing that same shift from the demands for product in 2018 and early 2019. But 2020 is shaping up to be a significant swing.”
The North American OE truck market has seen record-high production levels in 2019.
“The historically high order levels from 2018 is the main driver for 2019 extended growth in all three segments. Order levels in 2019 began to drop, and production levels, although still high, started to decline as the backlogged volume clears. Inventory levels at the OEMs are at high levels in preparation for a 2020 market decline,” Brock said.
Changes in powertrains are also happening, which impacts tire use and wear.
“One of the biggest trends we’re seeing is in the light- and medium-duty markets is the electrification of delivery trucks and vans used in the final mile segment. And that has created a need for tires that can handle higher torque. Due to the nature of electric vehicles, they have quicker ‘get-up-and-go’ power than diesel trucks, so they’ll cause more scrubbing and tire wear on conventional tires for these applications,” said Phil Mosier, manager of commercial tire development for Cooper Tire.
There is also an emergence of new products with integrated functions (hybrid, multi-products).
“We also predict the acceleration of new technology such as sensors and intelligent tires,” said Williams of Hankook Tire America.
Ton-mile growth in the medium-duty and Class 8 freight markets has been growing since 2016, according to Michelin.
“The growth in ton-mile, along with favorable shipping rates, has led to notable growth in both the OE and replacement truck tire markets. 2019 ton-mile growth has entered negative territory, impacting the sale of truck tires through 2020,” Brock explained.
Last-mile deliveries, the transportation of goods from a hub to the destination, is also impacting the truck tire market.
“We see opportunity and continued growth in the Class 1-2 vehicle segment, thanks in large part to last-mile deliveries and e-commerce. The growth of last-mile delivery also impacts Class 3-6, and we anticipate this segment to grow at an accelerated rate compared to the overall category,” Johnson said.
Clauer agreed that last-mile deliveries are having an impact on tire sizes.
“Increases in last-mile deliveries continue to impact the tire industry as we see a push for commercial products in the 16-, 17.5-, and 19.5-inch diameters. These products need to be able to handle the additional stresses and strains of heavier loads, urban P&D conditions, geographic, and topology demands that a normal LT product is not capable of, nor designed to handle,” Clauer said.
Additionally, tire manufacturing could leverage AI. “The tire development process has been shortened, but development time for all tires is a lengthy and expensive process. The use of AI may have some promise here,” said Weller of CMA.
In the past year, truck tire pricing has been rather dynamic, with some areas seeing increases and others experiencing stability.
“Increases have been seen primarily in the replacement market, primarily due to tariffs placed on tires manufactured in China,” said Mosier of Cooper Tire.
Raw materials hugely impact pricing.
“Pricing in the tire industry is determined by a number of factors, including the cost of raw materials and other market dynamics. At Bridgestone, we focus on delivering high-quality products that ensure our customers can compete and win in today’s market,” said Johnson of Bridgestone.
Some aspects of pricing are uncertain.
“The continued uncertainty on raw material costs as well as the impact from the countervailing duties imposed earlier in 2019 are having an impact on cost,” said Williams of Hankook Tire America.
But in the end, overall truck tire pricing has been relatively stable throughout 2019.
“The announcement of additional duties and tariffs on truck tires produced in China pushed up pricing coming into this year, as manufacturers adjusted their supply chains,” said Mike Graber, director of Commercial Truck Tire Sales for Toyo Tire U.S.A. Corp.
Pricing remains stable due to relatively low raw materials prices and lower replacement demand, noted Weller of CMA.
“The OE market remains strong but is showing signs of a slowdown in 2020. Labor cost increases are being offset by increased automation in tire manufacturing,” Weller added.
Finally, vehicle sales influence tire sales, and “all indications are that sales of new commercial vehicles will be down in 2020 after several years of increased sales,” according to Williams of Hankook Tire America.
Overall, the trends are on par with what has occurred in the past.
“After multiple years of robust truck tire growth, the market is seeing its normal cyclical pattern: a deceleration of growth, exacerbated by duties on imports of truck and bus tires from China since February 2019, which has inverted in some areas already and will invert for others by year-end,” added Brock of Michelin North America.
Vocational Market Insight
In general, the vocational truck market has a wide variety of different needs when it comes to truck tires, from longevity to durability.
“For vocational markets, tires with more lifetime are wanted. Vehicles and tires in this market run a limited distance in comparison with general commercial trucks in the same period. This means it takes them more time to wear out,” said Williams of Hankook Tire America.
There have been several new cab forward truck launches.
“The new cab forward trucks are a direct response to the changing landscape of the last-mile market. Tire manufacturers have taken note of this new direction by increasing production and introducing new products to meet this market. Potentially, this segment increase somewhat offsets the impending Class-8 OE decline,” said Clauer of Yokohama.
The growth of e-commerce and last-mile delivery has had a significant impact on future product development.
“Haul distances are getting shorter, and truck types are changing to accommodate the changing environment. The challenge is to design tires that perform well in the new environment,” said Graber of Toyo Tire U.S.A.
E-commerce means trucks are traveling shorter distances in more urban environments with more frequent starts and stops.
“With continued growth in e-commerce sales and the addition of more local fulfillment centers, the last-mile delivery segment remains strong. This creates a demand for tires that can withstand curbing and provide a higher degree of scrubbing, as well as more traction, in a high start and stop environment,” said Johnson of Bridgestone.
The construction industry and housing market have long been an indicator of market strength for the trucking industry.
“The construction industry, which has seen strong year-over-year growth in total spending since 2011, has begun a period of contraction in 2019, as residential construction spending falls. This multi-year growth saw strong commercial light truck tire growth, and while we see construction spending fall in 2019, marginal growth is expected based on the trend of continued growth in the commercial light truck market,” said Brock of Michelin North America.
Additionally, the potential GHG Phase 2 regulations could depend on updates in chassis, engines, and tires for decreased emissions.
“On Jan 1, 2020, CARB is proposing enacting the GHG Phase 2. This regulatory change could have a profound effect on vocational equipment by regulating new lower rolling resistance levels for tires specific to this segment. While this is, at this time, limited to California, it could have a far-reaching impact by including any fleets or owner-operators traveling in and out of the state,” Clauer noted.
Finally, several trends are occurring in the Class 8, over-the-road industry, including platooning and autonomy.
“In over-the-road trucking, trends such as platooning and autonomous vehicles challenge tire manufacturers in the longer-term to innovate smart tire solutions that can become part of a connected vehicle ecosystem,” Johnson said.
7 Tips for Extending Truck Tire Lives
When it comes to extending truck tire life, there are a few tried-and-true places to start.
“I encourage fleet managers to focus on the basics: air pressure maintenance, tire rotation, and pre-trip inspections. These three simple things maximize the life of tires and drive costs down,” said Graber of Toyo Tire U.S.A.
1. Watch Tire Inflation
The experts agree: monitoring tire inflation pressure is the top tip.
“The simple task of checking and maintaining tire pressure is the most critical thing a fleet can do. It not only extends tire life but also allows the tire to achieve maximum performance from all pieces of equipment,” said Mosier of Cooper Tire.
Keep your tires properly aligned and properly inflated to maximize performance.
“Underinflation can cause poor handling, fast or irregular wear, excessive heat buildup, decreased fuel economy, and permanent structural damage, which can lead to tire disablement or failure. Over-inflation can reduce traction, braking ability, and handling, resulting in uneven wear and may increase tire cuts, punctures, or other tire damage resulting from sudden impacts,” said Dustin Lancy, commercial product marketing manager – regional/urban for The Goodyear Tire & Rubber Company.
Implement an effective air pressure management system into driver pre-trip inspection protocol.
“Adding air pressure management to pre-trip inspections as well as shop maintenance protocol does wonders in reducing expensive emergency road service downtime due to tires as well as extending the life of the original tread and the tire casing life,” said Weller of CMA.
And remember to check air pressure when tires are cold.
“It’s best to check tire pressure when the vehicle has been parked for at least three hours or driven less than a mile at moderate speeds. The inflation pressure in all tires, including the spare tire and inside duals, should be checked with an accurate tire gauge frequently,” Lancy added.
2. Inspect it Often
Make sure drivers and technicians regularly inspect tires for damage.
“Inspect the tires daily for repairable damages, such as nails that go unrepaired turn into tire failures. Caught early, it could be a $20 fix versus a $1,000 road call with a new tire,” said Brock of Michelin North America.
3. Perform Proper, Regular Maintenance
One obvious, yet often overlooked, way to keep tires in service and tip-top condition is to provide regular maintenance.
“Conducting routine maintenance checks, such as tractor/trailer alignments, and checking mechanical components helps ensure tires won’t wear poorly or prematurely due to mechanical reasons,” said Mosier of Cooper Tire.
Have a good maintenance program that includes tires and axle end components.
“Ensure your tire program includes not just the maintenance crew, but the just-as-important drivers. They should be fully trained on proper air pressure and visual inspections. Not just to look for damage or foreign object, but wear patterns and the ability to understand what the tire is telling you,” said Clauer of Yokohama.
Stay on top of tire rotations for another way to extend tire life.
“On most standard 6x4 tractors, the rear axle tires wear faster than the front axle. By rotating the tires front to back, the fleet can extend the tires now on the front axle because that axle tends not to wear out tires as fast as those on the rear axle,” said Mosier of Cooper Tire.
4. Practice Proactive Tire Maintenance
Going beyond the basics, just as overall maintenance is important, proactive tire maintenance is critical to maximizing tire life.
“Proactive tire maintenance is a foundational best practice that helps fleets identify and address problems before they happen. Early identification can potentially avoid costly downtime and generate savings through optimized tire performance, including improved tread life,” said Johnson of Bridgestone.
5. Match the Tire for the Job
A hammer may work to get a screw in the wall, but it’s not the right tool to do the job and will likely cause more damage and headaches in the end. Tires must fit the job.
“Making sure you have the right product for the right application could be the single most important decision one could make to impact the bottom line,” said Clauer of Yokohama.
Tire design can be a series of trade-offs, according to Brock of Michelin, where fuel efficiency and long mileage can be mutually exclusive properties.
“Some fleets have multiple applications within the fleet, and therefore, one size shouldn’t fit all,” Brock said.
6. Take Advantage of Data Collection
Look for opportunities to leverage data-driven technologies and incorporate them into operations.
“While there’s no substitute for the manual, visual tire inspection, being able to digitally log this data in a brand-agnostic tire management platform creates a wealth of data that can be analyzed to look for patterns, allowing a fleet to become more predictive about maintenance,” said Johnson of Bridgestone.
7. Leverage a Trusted Dealer Partner
Finally, relationships matter in just about every aspect of fleet, and tires aren’t left out.
“Working with the right dealer partner can help fleets better manage their tire assets, while also giving fleet managers more time to focus on other aspects of the business. A trusted dealer will be able to advise on how to select the right tire for the application and develop an appropriate tire program to manage tire assets. They can help design a custom tire program, keeping in mind the requirements of the fleet to maximize uptime,” concluded Johnson of Bridgestone.