From driver to truck shortages: the Covid impact on lorry supply

Long waiting lists for new trucks and inflated prices for used vehicles are an unexpected consequence of the Covid crisis. Richard Simpson investigates.

Richard Simpson | 9th May 2022 11:36 AM

This article originally appeared in the May issue of Roadway Magazine.

As 2019 came to an end, the first reports of a mysterious disease apparently originating from a seafood market in Wuhan, China appeared. In a classic example of how a metaphorical butterfly (or in this case, more likely a bat) flapping its wings can cause a hurricane on the other side of the world, that is why you now have to wait for over a year for a new truck, or pay through the nose for a used one.

Chips in demand

As the realisation that the whole world was going to have to go into what we soon learned was called a ‘lockdown’, one of the first things that vehicle manufacturers did was cancel or delay component orders and deliveries. Production lines were going to close, and if the world was going to be shut at home there would be no demand for vehicles anyway.

Some component manufacturers may have been concerned by this, but the companies that make the microchips that are found in every system on every motor vehicle were not.

A new ‘stay-at-home’ economy rapidly evolved, with huge demand for consumer electronics for work, education, and leisure. The chip manufacturers simply switched to making components for home computers, tablets and smartphones, and carried on.

But, counter-intuitively, demand for vehicles did not end. UK second-hand car dealers who expected their stock’s value to fall through the floor instead found people keen to buy (especially cheaper) cars as public transport capacity was reduced, and people found the idea of being confined in buses and trains with their fellow humans not just unattractive, but dangerous. Even now, in 2022, public transport has not recovered, and it looks unlikely that it will in the foreseeable future.

The UK commercial vehicle market reacted in an even more surprising way. Traditional shopping became more difficult, so online grocery retail reached new heights, while physically shopping for items deemed ‘non-essential’ was forbidden; so the trend to online commerce for everything else also accelerated.

And the government deemed that construction was essential work, so that continued as normal.

Demand for ‘last mile’ delivery accelerated registrations of new vans by 21% in 2021, compared to 2020. Growth is expected to continue as Covid has increased the trend for workers to become self-employed and work from home: both factors that increase demand for light commercial vehicles.

Last year’s heavy truck market expanded by 12% to 31,763, but that figure has to be seen against a pre-Covid level of 48,500 units and a dismal 2020. Even 2021 had its ups and downs. The second quarter of the year had the lowest level of UK truck registration ever, but there was a very strong recovery in the rest of the year.

All this translated into a continued healthy demand for commercial vehicles: large and small, but the demand was not necessarily translated into new vehicle sales. No chips meant no production: in the UK this knocked vehicle production down to low levels not seen since 1956 and the Suez crisis.

Mike Hawes, CEO of the UK’s Society of Motor Manufacturers and Traders, says the crisis will continue with manufacturers, “fighting for semiconductors” and will only ease slowly through the year.

Truck lead times

The easing of the first wave of restrictions in Europe and the resumption of vehicle production was badly-timed, because, Hawes points out: “The Covid Delta lockdown in the Far East began almost simultaneously, and 80 microchip production plants shut.”

There is no slack in the system, Hawes explains: “Even in normal circumstances the plants work 24-hours a day, so there is no scope to increase production.”

A further issue is disruption to shipping. Prices for containers shipped from the Far East are running at levels 500% ahead of pre-Covid levels, and timings are erratic. Although overall there is no shortage of container boxes themselves, too many are piled up in the wrong places and the cost of sending them back empty to where they are required is prohibitive.

The impact is global, and across the entire automotive industry: not just trucks and not just Europe. Car manufacturers are quoting lead times from a few weeks to at least six months for UK delivery depending on the model.

Truck manufacturers are rather less forthcoming, but Roadway understands from informal discussions with individuals that even at the start of 2022, waiting times were extended into 2023. Delivery times for tractor units are generally shorter than for rigids, even before the extra time required to body the chassis is taken into account.

There are exceptions, though. Volvo Trucks is quoting lead times for standard diesel trucks of around 12 months, which it says are similar to those of most other manufacturers. However, FL and FE electric trucks are much easier to source, being available in just 15 weeks. It seems Volvo Trucks is following many car makers in promoting the sale of electric vehicles to reduce the overall carbon footprint of its production, and has taken advantage of the shared driveline between its electric trucks and buses to bring out more electric trucks (demand for buses of any type has yet to recover from Covid).

A good year for Iveco

Iveco, which over the decades since the 1980s has slipped from being a dominant force in the UK to what Gareth Lumsdaine, Iveco’s UK director truck business line describes as a “challenger brand”, as the market moved from 7.5-tonners (38% of the market then and just 10% of the market now) to heavy trucks, appears to have managed the crisis better than most European manufacturers, maintaining production of vans and trucks for all but two weeks of last year.

Consequentially Iveco enjoyed its best year in the UK heavy truck market for over a decade, particularly as its new S-Way heavy truck had already raised its profile with potential customers.

In terms of the difficulties caused to UK operators, Lumsdaine differentiates between customers challenged by difficulties in maintaining normal fleet replacement intervals and being forced to keep hold of the trucks they already have, and operators seeking to expand their fleets to undertake recently acquired work.

The latter customers can be, “devastated by product shortage,” he says, while larger fleets and rental companies, which tend to move vehicles on in about three years, experience little hardship in delaying replacements for 12 months or so.

Mind the gap

So what does a small fleet in a hurry do to fill the gap?

One answer appears to be to look outside the manufacturers’ dealer networks. Operators looking for specialist rigid trucks could, for example, contact independent dealer MV Trucks, which earlier this year was able to supply concrete services company Neil Sullivan & Sons with a new DAF rigid flatbed equipped with a brick grab, and a new DAF roadsweeper, along with a used Scania tipper.

Owner Neil Sullivan reports: “Originally, MV Commercial came highly recommended to us by another operator, and since that first deal we have had nothing but excellent service from them. The entire team go above and beyond to make sure they put our needs first.

“It’s no secret that lead times for new trucks can be far longer than expected at present, but with MV Commercial, we know we will always get a quick turnaround. With this latest order, they even provided us with a rental vehicle from its fleet at a competitive price while we waited for the DAF brick grab to arrive.”

MV supports its supplied vehicles via a network of more than 100 service locations.

And leasing and contract-hire specialist Asset Alliance is set to add almost 1,000 new tractors and rigids from DAF, MAN, Mercedes, and Scania to its fleet this year. Asset Alliance Group’s contract-hire and leasing sales director, Paul Wright, says: “Being able to support the transport industry with a strong supply of highquality multi-brand trucks and trailers is at the heart of what we do. We take pride in being able to give our customers exactly the assets they need, when they need them, which is why we put so much focus on long-term planning and large orders.”

The company aims to have the UK’s youngest fleet in contract-hire and leasing, and consequentially has a large number of returning vehicles available for sale, although demand for these too is brisk.

Shortage of vehicles

Brian Kempson, Asset Alliance’s used truck and trailer sales director, explains: “As we deal with the entire lifecycle of vehicles, our used truck and trailer team has good visibility of supply which means we can have early conversations with operators looking to extend their fleets with used vehicles.

“And the close and trusted relationships we have built with manufacturers during the past decade ensure they have been able to support our business goals, as well as those of our customers.”

Conversely, the recently announced departure of American leasing giant Ryder from the UK market indicates that the shortage of new vehicles may be biting hard on some buyers who find themselves unable to secure new stock at the right price.

For truck dealers, new vehicle shortages are boosting used truck values and depleting stocks as operators extend the lives of those trucks they have on-fleet already. Birmingham-based dealer Keltruck is advertising that it, “wants to buy your used Scania. All ages, models and mileages accepted.”

Impact of CAZ

Industry insiders tell us that there is now sharp polarisation in the used truck market, with Euro VI models selling fast for premium prices while demand for earlier vehicles is being dampened by concerns about the prohibitive cost of operating them in Clean Air Zones. So, such trucks can be bargains for operators whose work does not take them into CAZs.

Used vehicle advertising platform Autotrader reports healthy demand for used trucks and falling stock levels at dealers. In the past two years, the used truck stock held by Autotrader’s regular advertisers has fallen by 37%.

Autotrader says the most attractive vehicle type on its website based on leads and interactions is tractor units, with Volvo, Scania, and MAN the most popular brands.