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The leading role
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Lead times have long been a problem in the haulage industry, but recently these have started to shorten. We take a look at this upturn.
Words: David Harris
THE DELAY BETWEEN ordering a truck and having it delivered has long been a thorny issue for the haulage business. A lengthy waiting list might add to the glamour of buying a smart sports car, but it doesn't do much for a haulier whose business is crying out for another 44-tonne tractor unit.
This is why recent indications that waiting times for trucks are beginning to shorten are being greeted as good news all round.
Hauliers have long moaned about lengthy lead times and manufacturers have long promised to try to do something about it, but a year ago, some truck-makers were admitting that getting their heaviest units involved a wait of 12 months or more.
The annoyance this caused was evident earlier this year (CM 22 February) when the chairman of the commercial vehicle committee of the British Vehicle Rental and Leasing Association (BVRLA), David Farbon. roundly condemned manufacturers. He said he was incredulous "that a mature market, such as the commercial vehicle manufacturing industry, can get things so dramatically wrong for its customers". He added that manufacturers were effectively forcing operators to keep running older trucks, which were less fuel-efficient and environmentally friendly than the newer vehicles they wanted to buy.
Long-term planning
Broadly speaking, the manufacturers' response was that they were making efforts to correct the situation, but that truck manufacture required long-term planning and was not a tap that could be turned on and off at will.
Certainly none of the manufacturers were happy with year-long lead times, and several took measures to alleviate the wait. Iveco, for example, made a strategic decision to increase its market share of the UK heavy truck market from 6% now to 15% by the end of 2011. To do this, it decided to devote more of its production to the UK market, and one result is that the lead times for its heavy trucks have dropped from a year to six months since the middlc of 2007.
But although most truck-makers are aiming to increase supply, there is also evidence of a fall in demand. Daf's marketing director, Tony Pain, says that there had been some cancellations of orders, although this is "by no means a deluge". He adds that the demand is still such that every cancellation is taken up by another buyer, which is helping to bring lead times down a little, which Daf entirely welcomes.
The company is also increasing production at its Leyland, Lancashire plant, which is now producing 115 trucks a day compared to 60 a day at the beginning of 2007.
Steady demand
Pain emphasises that the demand for trucks remains remarkably steady in the UK, with a 10-year average of 50,000 trucks a year above six-tonnes registered. In the last calendar year, this was slightly down at 43,000, but in the rolling year to now the figure is at the 50,000 long-term average.
He says: "The demand for transport goes on. I would suggest all makes have been trying to lift production levels, but it is a long-term business and we are often constrained by how suppliers can increase supplies of parts such as windscreens, tyres, fuel-injection kits and even head-rests. These things seem small, but you can't complete a truck without them."
Overall, there seems to be agreement among manufacturers that the credit crunch and economic anxieties have slowed decisions to buy new trucks.
Mercedes-Benz spokesman Ian Norwell says: "The market is softening, but not dramatically so. Certainly we are still trying to ramp up production, and we are planning to increase it next year for the UK."
Norwell says that for Mercedes, managing lead times and production levels is a complex calculation. This is not least because the truck business is now almost completely global, with the shifts in demand for each region having consequences for others. For some manufacturers. the recent decline in demand in the Spanish market, for example, has allowed greater production to be allocated to the UK, just as the boom in Eastern European demand made the manufacturers look cast. Eastern European demand continues, but the rate of growth is slowing, say the manufacturers.
On the bright side
Overall, nobody in the truck-manufacturing market seems to believe that sales are about to fall off any cliffs. For hauliers. a rare plus in the economic downturn may be that lead times do continue to come down, but few think that demand will fall so sharply that you will be able to walk into a dealership and drive out in a new tractor unit.
For the time being, lead times look as if they are here to stay, and in much the same form, if not duration, as they are now. The bigger the truck the longer you are likely to have to wait, with order books remaining solid. It's just that you might he looking at six months between ordering and receiving your truck, rather than a year.
The effect of this fall will probably be to make hauliers' buying decisions more relaxed (see panel), because they will no longer be driven by fears of being left with contracts but without enough trucks. The problem with having to predict the size of a fleet needed in a year's time is that such predictions can often get it wrong. •