The supply chain issues that have plagued truck and trailer production this year are unlikely to be resolved soon, but when they are, FTR Vice President of Commercial Vehicles Don Ake expects each segment to set records.
Presenting Thursday as part of FTR's ongoing virtual State of Freight series, Ake said there are no reliable signs that would allow anyone to predict when there will be any relief in the supply chain, which he called "the worst supply chain/shortage environment since World War II."
Semiconductors are the most well-documented and most sought after component, but Ake noted there's currently more than 20 products and parts experiencing late and partial deliveries and that it could be as high as 40. "Once you get over 20 it really doesn't matter," he said, "because it's going to slow (production) down. Even if the semi conductor issue was solved on the Class 8 side, you still wouldn't be able to get up to maximum production."
Missing components include plastics, electric harnesses, and stamped and heavy steel parts coming from overseas, but Ake noted the availability of missing parts changes regularly.
"As soon as they get five components in and they think they're good, they get another delivery and it's short five other components and they're not good," he said.
Demand for semiconductors continued during the shutdown but production shifted more toward consumer goods like TVs, computers and home appliances as demand for trucks and autos was expected to crater amid state lockdown orders. Some semiconductor factories around the world shut down to slow the spread of COVID and were slow to restart, causing supply to fall significantly behind demand. A resurgence of COVID in Japan and Malaysia slowed semiconductor production restarts in those countries. "That hit our industry hard in July," Ake said, noting there is little excess capacity in the semiconductor industry because it's a low-margin product dependent upon high volumes to earn profit.
Due to component shortages (semiconductor and otherwise) OEMs are assembling units that are not complete, generally lacking one or more components – commonly called “red tag units.” Ake said red tags began appearing around February and, he said, "at that time were manageable. Red tag units surged in July as semiconductor deliveries slowed." Ake estimated that there are currently 13,000-20,000 red tag units sitting partially built across OEMs.
