Freight Stuck In Supply Chain Catch-22

Freight Stuck In Supply Chain Catch-22

Supply chain issues are driving up the need for freight distribution. But those same issues are why freight companies can’t deliver.

To meet the demand, truckers need more trucks. And similar to (seemingly) every other product, parts shortages are stalling the production of these 18-wheelers.

Last year, the industry manufactured 264,470 heavy-duty trucks. ACT Research Co forecasts this figure will increase to 296k vehicles in 2022.

However, this estimate is still down ~50k units from the industry’s 2019 output. Truck manufacturers have already backlogged 250k+ orders for 2023 (~2x the normal level).

Meaning, as Kenny Vieth, ACT’s president, puts it: “Demand continues to outstrip the industry’s ability to build trucks.”

This dwindling supply is forcing freight companies to turn away business as old fleets prove unreliable.

“You need every truck up and running if you can’t get more,” said Paul Truman, president of Truline Corp, a Las Vegas-based trucking company.

But without new wheels hitting the road, companies are putting more miles on older vehicles and seeing more breakdowns.

Coupled with driver shortages and surging fuel prices, these breakdowns are pushing up delivery times (lead times are currently sitting around 6 months or ~3x longer than usual).

And unless other links in the supply chain get fixed, these delays will likely be here for the long haul.

But here’s the catch: Fixing those links might mean the demand for freight hits the breaks just in time for new trucks to hit the market.