This is long.....
It’s not just green. It’s everyone. Initially, it was due to plant shut downs. Plants were closed for a couple months (first overseas) then here. This created a backlog in demand. I work at one of the largest short line (construction, not ag) dealers on the east coast. We are seeing it in various forms from everywhere.
At first the factory shutdowns caused a backlog on the unit. ie - the plant is closed, they were not making loader backhoes. We were still selling, so supply was overwhelmed. Those that had standing stock orders in from Oct/Nov of ‘19 for spring delivery received them in June of ‘20. We typically order another stock order in feb/mar for June/July delivery but those orders were pushed back to sept/oct
Then components get short. Everyone was running on JIT (just in time) manufacturing and delivery. Overseas components were becoming backlogged. You could have everything you need to make a backhoe with the exception of a wire harness. This stops all production of that product further pushing out lead times. Every week my “on-order” report shows delivery dates being extended on standing orders.
Right now it is taking me 8 months to receive an order for a TLB for one of the US’s top 3 manufacturers of TLBs.
That’s a US manufactured machine. We are now experiencing an additional problem with anything (parts or Wholegoods) coming in a container from overseas. The seaports are overwhelmed. One of the Japanese brands we represent bring their eastern US supply in through the port of savannah. There are dozens of container ships anchored off shore waiting for their turn at port. Machines we should have received last week are sitting offshore and I’m being told end of March/April delivery. This isn’t just machines, it’s everything coming in a container. I don’t know the status of Baltimore, but I do know that Long Beach, CA is in the same situation.
This seaport issue will ripple into a ground freight issue. There will not be enough trucks to move all off this freight to its destination. We are now being told to expect significant increases in freight charges due to both fuel costs and truck availability.
Please be aware, it’s not just wholegoods. It’s parts as well. We had a popular 18k pound mini excavator spring a leak in a hydraulic cooler. In the past, if we placed an order by 5pm, we’d receive it in our order that is delivered during the night shift for our customer to pick up at 7am the next day. These days, we are being told it’s 4-8 WEEKS to receive the cooler. A lead time that long tells me they have no idea when they’ll actually see the cooler.
Same thing is happening with automotive. GM and Ford have closed order banks for fleet orders for 2021. Think about that. I’m guessing a large percentage of Ford sales are fleet customers (utility companies, construction companies, federal, state, and local municipalities). Those orders were cut off in January!
It’s a mess and I don’t see an end in the near future.
Those dealers that have inventory were guys that had forward orders in and received them at the wrong time (like us). We received over 50 large excavators (>25k lbs) in Nov/Dec. They are on our lot now. Driving by, it looks like we have tons of inventory (we do). Unfortunately, these were units that we should have had last June/July.
There are many more intricacies, but I’ll stop there.....