Tractor Shortages

[mred2]

We have had f250's on order for some time. Dealers are listing used trucks for $10 to $20,000 more than they would have sold for 5 years ago. 1/2 tons, yes, bigger, NO!
A friend building a house was told that the bath tubs would be 3 to 4 months. My boss ordered a new refrigerator, it has been over 6 months. While things are better in places, a long way from being back.
If you have one to sell, do it. If you want to buy, I am not sure. My son thinks that truck prices will come back down by summer. I know that the price on new trucks is going up.

 

[Torvy]

The pricing problems are layered. The thing that could be handled quickly, if there was an will to correct the problem, would be to unload the ships. It would take intervention on the federal level and likely use of military trucks and loading personnel to handle it. It would be expensive.

When a serious backlog like this happens in a private sector environment, the regular process will usually be set aside to address the problem. Overtime, suspension of some rules, do whatever it takes. The thing is, continuing to do what you have always done only has x amount of capacity. Since the docks are clearly way behind, the old process can never catch up.

The inflation will take longer to handle, but better to have expensive tractors on the lot than to have no tractors on the lot.

 

[rScotty]

Gasoline and Diesel Fuel Update

Gasoline and diesel fuel prices released weekly.

www.eia.gov

Breakdown of current prices by region.

Thanks for posting that. It shows that gas and diesel prices are stable - not at all what the news media would have us believe. i.e. a slight upward trend in costs but not at all what one hears on the news.

Sometimes I wonder if we are all living in one world and the news media another.
rScotty

 

[IndyJay]

Wow...

 

[crazyal]

In 2008 lots of companies got caught with way too much inventory ($$$$$) sitting on a shelf or lot unsold in a recession just at a time when they needed the money. So they all followed Toyota's lean manufacturing or "just in time" manufacturing. The concept is you only have enough inventory to build what you can in a given short time period. For example you wouldn't have 6 months worth of seat inventory for a tractor. Instead you have a couple days worth and a supply chain that will deliver seats at a pace that matches your production rate. So when the supply chain tightened companies didn't have the depth of parts to weather it.

 

[Torvy]

Thanks for posting that. It shows that gas and diesel prices are stable - not at all what the news media would have us believe. i.e. a slight upward trend in costs but not at all what one hears on the news.

Sometimes I wonder if we are all living in one world and the news media another.
rScotty

You do realize that is only the last 2 weeks, right?

 

[IndyJay]

And that the "year ago" figure was price, not percent? A 50% jump is not what I would consider "stable". I do agree though that the news media is not reflective of the real world that we are all living in.

 

[Midniteoyl]

Thanks for posting that. It shows that gas and diesel prices are stable - not at all what the news media would have us believe. i.e. a slight upward trend in costs but not at all what one hears on the news.

Sometimes I wonder if we are all living in one world and the news media another.
rScotty

??

Regular unleaded gasoline now costs an average of $3.41 per gallon, an increase of 61% from the $2.12 average 12mo ago. One of the largest 12mo jumps in price ever.

 

[Hay Dude]

Interesting charts, but they don't say where those prices were taken. Our diesel costs less than that.

My point is that it is normal for people to think that the entire rest of the country is experiencing the same things that are affecting them locally.
And it's just not so.

rScotty

rScotty,

National average retail gas and diesel prices
Source: US Retail Gas Price

 

[jyoutz]

Trucking was deregulated in the early 1980's; up to that point it was high wage Teamster driven. (no pun intended)

Seems like truck driving is pretty high pay today. I saw a billboard on I-40 recently advertising driving jobs for $80k to start. Walmart is paying $100k.

 

[Hay Dude]

Seems like truck driving is pretty high pay today. I saw a billboard on I-40 recently advertising driving jobs for $80k to start. Walmart is paying $100k.

Company truck driving is a way different career than independent truckers.

 

[jyoutz]

Not as much as over-regulation, high taxes and overpaid, over -benefitted employees.
If you get rid of maximizing shareholder value you might as well say goodbye to capitalism

We used to make good products without cutting quality and shareholders still made money. Maximizing shareholder returns resulted in off shoring production and loss of jobs. Capitalism was doing fine before the current mentality became prevalent. Wages and benefits are still set by market forces. People don’t want to work for low pay without benefits anymore because you cannot get by on 1980s compensation anymore.

 

[jyoutz]

How can you afford to pay truckers well when your operating costs are going sky high due to the policy of the current administration which is causing inflation to balloon to levels we haven't seen in 32 years? The bottom line really changes when fuel is $4 a gallon and operating costs soar. Doesn't leave as much meat on the bone for payroll. This government is to blame for EVERYTHING right now. They're even responsible for the shut-downs that started the mess in 2020.



A major drawback is that the consumer can't get exactly what they want. You cannot walk into a Toyota dealership and order a truck exactly the way you need/want it. And that's a big no-no to an American consumer who is about to drop $55,000 on a vehicle.

In addition to that, my father who is a heavy equipment mechanic tells me that Toyota's industrial division is hurting right now. Can't get parts, can't get equipment or machines, nothing.

Post Covid inflation is worldwide and this administration isn’t creating it in other countries. There is a big world besides the US. Covid and inflation is pandemic in 2021.

 

[Diggin It]

Maximizing shareholder returns resulted in off shoring production and loss of jobs. Capitalism was doing fine before the current mentality became prevalent.

Like I said before, bean counters are evil.

Charts over time are national averages and are often tilted to make a point. They usually can't be trusted entirely.

Gas is up because people are driving more. Supplies are down because people are buying more than the supply chain can deliver. Prices and supplies are affected worldwide.

Production and transportation are down because of irresponsible cuts and lack of planning to ramp up again.

I could go to a store this morning and come home with a refrigerator before noon.

 

[Torvy]

As the worlds biggest economy, by GDP, the US has a pretty big impact on world inflation. In addition, inflationary fiscal policy is not the sole purview of the US or any particular political group. Rather than reposting things written by 'professionals' who all have implicit and explicit biases, I would highly recommend more people take the time to learn how the economy actually works.

 

[rScotty]

SNIP

I could go to a store this morning and come home with a refrigerator before noon.

Why bother to drive to town? You can order it online and have it delivered the same day.

 

[rScotty]

As the worlds biggest economy, by GDP, the US has a pretty big impact on world inflation. In addition, inflationary fiscal policy is not the sole purview of the US or any particular political group. Rather than reposting things written by 'professionals' who all have implicit and explicit biases, I would highly recommend more people take the time to learn how the economy actually works.

My hope is that someone who actually understands the economy will explain the difference between inflation and consumer price index.

 

[rademamj1]

In 2008 lots of companies got caught with way too much inventory ($$$$$) sitting on a shelf or lot unsold in a recession just at a time when they needed the money. So they all followed Toyota's lean manufacturing or "just in time" manufacturing. The concept is you only have enough inventory to build what you can in a given short time period. For example you wouldn't have 6 months worth of seat inventory for a tractor. Instead you have a couple days worth and a supply chain that will deliver seats at a pace that matches your production rate. So when the supply chain tightened companies didn't have the depth of parts to weather it.

Interestingly, a Wall Street a journal report came out this week on Toyota, and how they managed the world wide chip shortage better than any other auto manufacturer. Mainly because chips were the one single car part they have always maintained a 6 month supply in house; while also requiring chip suppliers to maintain by contract an additional 6 month supply available only to Toyota. Giving Toyota a full 1-year inventory of chips. Toyota is off just 1% from their projected production levels on selected models.

Here is a good NPR transcript analysis of how the Toyota "just in time" supply chain was adapted and modified after the major 2011 earthquake that hit Japan. Makes for good reading.

Toyota Camry, supply-chain hero : The Indicator from Planet Money

Toyota pioneered just-in-time production. But this lean method is dangerous when car parts are in short supply, like in a pandemic. Today: How Toyota invented and reformed just-in-time production.

www.npr.org

 

[rScotty]

Interestingly, a Wall Street a journal report came out this week on Toyota, and how they managed the world wide chip shortage better than any other auto manufacturer. Mainly because chips were the one single car part they have always maintained a 6 month supply in house; while also requiring chip suppliers to maintain by contract an additional 6 month supply available only to Toyota. Giving Toyota a full 1-year inventory of chips. Toyota is off just 1% from their projected production levels on selected models.

Here is a good NPR transcript analysis of how the Toyota "just in time" supply chain was adapted and modified after the major 2011 earthquake that hit Japan. Makes for good reading.

It does make for good reading, but what is not mentioned is that not all companies subscribe to the "Just in Time" business philosopy. Or even that other better business philosophys exist and are more successful.

I worked for a number of medium size manufacturing companies, and I never ran across a company that actually used "Just in Time" for their principal product. The subject did come up both in school and later on the job. But there were too many downsides.

Frankly, there are several better business models. A few very large companies could do JIT if they have a predictable market and an unchanging product line, but it is not at all universally popular or applicable for those very reasons.

My experience is that most don't use it. It makes a nice news story, though.
rScotty

 

[Macinnis]

Like I said before, bean counters are evil.

Charts over time are national averages and are often tilted to make a point. They usually can't be trusted entirely.

Gas is up because people are driving more. Supplies are down because people are buying more than the supply chain can deliver. Prices and supplies are affected worldwide.

Production and transportation are down because of irresponsible cuts and lack of planning to ramp up again.

I could go to a store this morning and come home with a refrigerator before noon.

Right, because closing down a few pipelines had zero, zip, nada, absolutely nothing to do with supply.