Hindsight is said to be 20/20, yet this isn’t a faculty that helped the tyre industry this year. Early optimism driven by vaccine rollouts quickly turned to despair as sideways-parked container ships, skyrocketing sea freight prices, rising material costs and supply shortages delivered blow after blow. As we enter the final quarter of the year we have a much clearer view of what’s going on, and what we see is that tyres will be pricier in the coming months – assuming we can get our hands on them.
At the start of 2021 we published a headline suggesting that “shipping costs [were] temporary” and “price increases less so”. While that article was based on the latest third-party data as well as the expert opinion of a leading wholesaler, it now looks like shipping cost woes are set to continue well into 2022 and that – while they have softened recently – raw material costs will remain headwinds during the next year or so as well.
Year-on-year comparisons of financial performance tell us arguably more about global events than an individual company’s economic trajectory at the moment. Thus, it came as no surprise a few months back when Michelin reported much healthier first-half results compared with pandemic-riddled 2020. Similarly, eyebrows aren’t raised now when the company notes the impact of rising materials, shipping and energy costs as well as a shortage of semiconductors and labour shortages upon its performance in Q3 2021.
Trelleborg Group brand Mitas has announced price increases for its motorcycle, scooter, go kart, trailer and aircraft tyres, as well as for its complete range of tubes and mousses. This increase, the second for 2021, takes effect from 1 October 2021 and is being implemented due to “significantly higher prices of raw materials and logistic services across the industry.”
Marangoni is raising prices for retreading materials in all global markets. It reports that as of 1 June, sales prices for the tyre retreading rubber materials offered by its Retreading Systems division will increase by 0.20 euros to 0.30 euros per kilogramme, depending on the product.
As the April edition of Tyres & Accessories went to press, the story of the Ever Given – the 400-metre long container ship that got wedged in the Suez canal – was getting a surprising amount of news coverage. The spectacle of a ship the length of four football pitches was enough to capture the attention of many. For others, the anecdotes of tenacious tug pilots and plucky digger drivers trying to free the gargantuan vessel from its unscheduled moorings did the trick. But for those in the tyre trade – and hundreds of other lines of work connected with global logistics – there were solid business reasons for their interest. “How many boxes have you got on the Ever Given?”, one tyre wholesaler asked. “It’s times like this…”, the other comically replied leaving the rest of his reply to the imagination.
The effects of the coronavirus and Brexit have led to an increasingly severe shipping bottleneck. The inevitable result of all of these factors is price increases. Tyres & Accessories spoke with Micheldever Tyre Services (MTS) wholesale director Graham Mitchell in order to find out more about what this means for the tyre retail sector.
Getting right to the point, are prices going to go up in 2021? “Undoubtedly,” was Mitchell’s immediate and definite response, with the wholesale director pointing to the three main factors behind the current and forthcoming price hikes as well as the different variables associated with each: “Containerised cost of product coming out of the far east…that’s not doubled, that’s quadrupled…a significant on-cost not to be underplayed…and then you’ve got a currency element that’s forcing manufacturing costs up as well.” The good news is that wholesale sources are confident that the containerised element is temporary, but the same cannot be said about other factors.