Just a short note on the effects of “Supply Chain Disruption”.
I was watching a video about RV Life (as we may end up doing that) and the “story” of that episode was about tires. These folks had a Big Class A with what looked like 19.5 or 22.5 inch (industrial truck sized) rims and tires. The basic point they were making was that “they got the last 6 tires of that size in the nation”. The tire company had to call all over the place to fine tires, one at a time, and have them shipped Fex-Ex to them to install a set.
Now I don’t know they really got the very last tires, simply because you always find things in the last place you look. (Folks stop looking then as their quest is satisfied…) I also heard the name Michelin go by, so it was unclear if their search was also limited to one brand. A quick check with TireRack about common RV tire sizes available, showed a 225/70R19.5 in stock but a 245/75R22.5 was unavailable. That last one is the “same” more or less as a 235/80R22.5 that they do have in stock.
Per Tire: $537.71
Can be delivered Tuesday, 09/14 to 95050
Set of 4: $2,150.84
But notice that availability date… One Month Away. (Also notice that nosebleed pricing…)
So is that when the next container comes in? I note too that they listed only 1 tire type available in 235/80R22.5 size, none for 245/80R22.5, and one in 255/80R22.5
Size: 255/80R22.5 G
Load Range: G
Availability: 1 In Stock, Special Order Available
Can be delivered to 95050 when available
Set of 4: $3,147.76
At “way higher” price, with ONE tire only in stock and others “when available”…
So depending on just what size tire they were looking for / required, there is evidence for their claim.
For the “smaller” 19.5 rims, TireRack has 5 listed in 225/70R19.5, but in 245/70R19.5 they list only one and it is not available until 8/28.
(H/T Another Ian in the current W.O.O.D. for pointing to this link about inflation:
It points out that containers in China are presently in very short supply with shipping rates “way high”, like triple normal, and that smaller markets are not being serviced fully. I’d expect that with tires that run $500-$800 each, they would be getting priority, but apparently not.
Sadly, this is now having severe repercussions in smaller shipping markets around the world. From Africa, from South America, and from smaller Asian countries, we’re hearing reports that ships are calling at their ports less frequently, because the demand on major trade routes between China, the USA and Europe is so strong. What’s more, there are fewer containers available to serve smaller markets, and the suppliers from whom they normally buy are no longer selling to them because they can make so much more money selling to bigger markets. Shortages of critical items – spare parts, medicines, even food – are thus becoming more frequent in smaller countries.
I’d point out not only in “smaller countries” but also in particular goods in larger countries. If my choice is shipping a container of iPhones priced at $1k / pound, or giant tires with way fewer per container and about 90 pounds / $800 , guess who gets the container out of the bidding war…
FWIW, all my cars have relatively new tires on them but one, and it has a couple of years left before those tires “age out”. I tend to keep good tires on the cars just so I can go a few years without buying any if times are tough. But, should I buy an RV, I’ll be looking closely at tire Age / Size / Wear and availability…
Was it just a halt in global shipping that stacked up containers where they were not needed? Is it that we have a deficit of inventory (backlog of demand) from a year of folks NOT buying things and shipping shut down? Are ships just out of place and not where needed? Has some capacity gone bankrupt and left the system? Or is it just as the link suggests, greed?
I’d bet on a combination of deficit of inventory, ships out of place, containers out of place, and staff running into all sorts of rules about where they can, and can not, land a ship. (Imagine the nightmare of trying to get a load of anything into Sydney, NSW during their travel prohibitions; and staff dismay at ZERO shore leave.) The globe was set up for a LOT of “Just In Time” inventory. Manufacturing to retail. Suddenly halt that system and empty the pipeline, it will take time to refill it and get it running smoothly again. We still have barriers to letting that process run.
Here’s the video. She covers some of a “Global Rubber Shortage”, so that might deserve a “Dig Here!” of its own to validate. I stopped the video at 4:49 and got their tire size. 265/75R22.5, so a bit odd IMHO, and likely a big part of their particular issue.:
CNBC has an article calling it a “Rubber Apocalypse” in their usual breathless form, and Bloomberg has one from April 14, 2021 (no linky for either of them as they are acting all evil and TDS) that claims it’s about cyclical things (and China buying up inventory…)
Industry watchers say rubber prices are at the beginning of a cyclical, multi-year rally because flooding and leaf disease have ravaged supply, while swooning prices gave rubber tappers little incentive to plant new trees, which take seven years to mature.
These dynamics came to the attention of some rubber distributors last year when China, the world’s largest consumer of natural rubber, began making big purchases to replenish reserves as its economy opened up.
By December, U.S. manufacturers who had held back on ordering rubber during lockdowns were now scrambling to secure it.
Seems to me that China, being the largest consumer, buying inventory, would just mean lots of tires from China and not as many from France and Ohio. But still tires…
But is this really new? Perhaps I ought to start a Rubber Plantation in Florida?
US seeks domestic rubber as global shortage worsens
The importance of developing alternative sources of natural rubber becomes clear when considering that there has been a shortage in the supply of this critical resource every year since 2004. By 2020, the global shortfall of natural rubber is projected to be more than the entire amount (1.2 million metric tons) the U.S. imports every year.
Mauricio Espinoza, Ohio State University | Nov 01, 2012
So 9 years ago and well before any Chinese Wuhan Covid pandemic supply chain disruptions.
The 6,000-square-foot pilot plant in Wooster makes gloves and a variety of other latex and rubber products. This is nothing new in a town and region historically known for rubber manufacturing. What’s different about the facility is the source of its natural rubber: plants grown in the United States rather than the Southeast Asian trees that currently provide all of the world’s supply of natural rubber.
Established earlier this year, this unique pilot plant is operated by Ohio State University’s Ohio Agricultural Research and Development Center (OARDC). It’s a crucial step in the university’s effort to develop and commercialize domestic natural rubber sources that could one day replace a portion of the imports of this strategic yet largely overlooked raw material.
“Natural rubber is probably the most underappreciated critical resource that we have,” said Katrina Cornish, project leader and OARDC endowed chair in bioemergent materials. “There are over 40,000 things made with natural rubber, including 400 medical devices. Life as we know it wouldn’t be possible without natural rubber.”
Driving to the grocery store wouldn’t be possible. Neither would be flying around the world. Even with the most sophisticated advances in synthetic rubber technology, passenger vehicle tires need about 50 percent natural rubber content to adequately resist the road’s demands, said Hiroshi Mouri, president of Bridgestone Americas Center for Research & Technology in Akron.
And in the case of aircraft tires, they are made entirely from natural rubber.
“It’s very important to have an alternate source of natural rubber,” said Mouri, who works closely with OARDC in the project. “We want to diversify the sources of natural rubber to make sure our production is sustainable. The rubber tree has a history of extinction in the past in Brazil, and if that happens in Southeast Asia, we won’t have a source of natural rubber. So it’s important to have other alternatives.”
Those alternatives include Taraxacum kok-saghyz, or TKS — a type of dandelion native to the former Soviet republics of Kazakhstan and Uzbekistan. This plant can produce large amounts of rubber in its roots and can grow in Ohio and other temperate areas of North America. OARDC researchers have been working for the past six years on turning this weed into a crop that can grow on a consistent, predictable basis and can yield as much rubber as possible.
Looks like Rubber Trees are prone to plant diseases. Perhaps they ought to put effort into breeding resistant types…
But this fragile supply is under threat. A native of the Brazilian rainforest, the rubber tree Hevea brasiliensis is no longer grown commercially in the country due to the prevalence of South American leaf blight, a catastrophic pathogen which killed off the country’s rubber industry in the 1930s. Strict quarantine controls have kept the disease contained to the South America for now, but arrival in Asia is thought to be almost inevitable.
In the meantime, farmers elsewhere in the world still face local pathogens such as white root disease and other leaf blights that have made the leap from neighbouring oil palm plantations. Climate change is also exerting its toll – Thailand’s rubber production has been hit by droughts and flooding in recent years, with the latter also further spreading disease-causing microbes across growing regions.
So is it all down to weak genetics and pathogens? Or might there be farmer decisions involved?
This situation further jeopardises the supply of rubber. “The mathematics smallholders make is that income equals price times volume,” explains Meyer. Low prices force farmers to over-tap their trees to obtain more rubber, weakening the plants and making them more susceptible to disease. The low prices have also discouraged planting of new trees to replace those at the end of their commercial lifespan, and many farmers have abandoned plantations entirely.
Eleanor Warren-Thomas is a research fellow at Bangor University, Wales, who has studied the dynamics of rubber plantations. “Oil palm and natural rubber make the same money per unit of land, but the labour input is higher for rubber,” she says. “Because the rubber price is falling, farmers are switching from producing rubber to selling the timber for near term profit, and growing oil palm instead.”
These factors combined means that the world is now at a point where the supply of natural rubber is not keeping up with demand. In late 2019, the International Tripartite Rubber Council warned the global supply would fall short by one million tonnes (900,000 tons) in 2020, around 7% of production. Then the pandemic hit.
So it’s a market price oscillator. OK… As short supply drives prices back up, that will reverse.
Demand reduced immediately, and driven miles – the key measure for ultimate demand for rubber – dropped as countries went into lockdown. But rubber soon bounced back. “Demand outpaced even the most bullish predictions,” says Meyer. As they came out of lockdown, Chinese citizens bought huge numbers of new cars, thanks to fears around the safety of public transport. Similar patterns are expected globally. “Demand has since eclipsed supply,” says Meyer. “Now there is an acute shortage (of rubber) in destinations, and inventory held by tyre makers is very low.”
Although synthetic rubber can be produced from petrochemicals, natural rubber has unique properties which even these synthetics can’t match: natural latex gloves are more resistant to tear than nitrile ones, while aircraft tyres use natural rubber for its high elasticity and resistance to heat, which can build up from friction during landing.
OK… so a massive fleet buying pulse will end too. Looks to me like this is something of a self healing disruption and likely just a short term disruption to get through.
OTOH, part of the cause of W.W.II was Japan wanting to capture the rubber supply from South East Asia, in part in retaliation for the USA stopping oil supply to Japan. That put the USA in a hell of a bind, and we created / invented synthetic rubber as an alternative. Not a perfect replacement, but “good enough” for a war. Most importantly, for things like tires, you could still make a GREAT tire with just 10% natural rubber and 90% synthetic. So what natural rubber we had got used to make far more total rubber products.
Still, point taken, rubber, natural rubber, is essential for a whole lot of products as made today. Were the supply to be stopped suddenly, in short order airplanes would not be able to fly as their tires wore out. (Landing burns off a lot of tread rapidly for some planes). This would be catastrophic for both commercial aviation and military. Though I’m pretty sure the Military would get near instant waivers for a fully synthetic tire. You might need to change them more often, but you could still fly. (At one time I saw a (Pop Mechanics?) story about Jeeps running on Urethane Tires – and then the story died. I suspect a “military secrecy” kill happened for “run flat tires” that need zero rubber. In times of shortage that would be a dramatic strategic advantage.)
There’s always Fear Porn thrown about on “Shortage! GASP! END OF LIFE AS WE KNOW IT!!!! BUY NOW!!!!”, and that forgets several things. The biggest is just “resource substitution”. Engineers and Chemists find another way. Then there’s the economic forces that have more “discovery” and production done when prices rise. That Ohio R&D being a good example. We can make rubber from another plant IF or WHEN the price gets high enough. So never panic long term about a “Shortage!”, though in the 1 to 2 year span it can be disruptive.
So for now, I’m not worried as my tires are relatively new and in good shape. I’ll just “check the tires” a bit more closely on anything I might buy. But it does look like a little bit of a “watch this space”, and keep an eye on China buying up “rubber plantations” in proximity to the South China Sea (and then “finding” a map showing some Chinese guy visited it 2000 years ago so it must belong exclusively to them…)