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From the Editor
SUPPLY ISSUES PLAGUE EQUIPMENT INDUSTRY IN 2022
The heavy equipment supply chain, much like most of the routes that consumer products take from start to finish, is very rarely a straight line. In today’s industrial pipeline, the sources of parts and components for any kind of manufactured good are spread over a broad space, and it doesn’t take much for one of the little kinks in the pipeline to cause problems.
Witness the challenges that the world’s supply chain faced when the container ship Ever Given ran aground and clogged up the Suez Canal in 2021. The disruption certainly seemed much longer than the six days it took to clear the blockage. That’s the trouble with the broad supply networks that manufacturers must deal with: one hiccup is enough to throw off the flow of key materials to the entire process.
At present, the world is dealing with one of the most significant supply chain disruptions it has ever faced. The continued challenges of the COVID-19 pandemic have slowed production at facilities across the globe, and the knock-on effects have been felt in numerous industries, heavy equipment manufacturing among them.
In the heavy equipment supply chain, many components are sourced from overseas providers, and those components are shipped to the manufacturer’s facilities – and for North American manufacturers, that means container shipping. The problem here is that for months now there have been significant delays for unloading at American ports. A report in late January from supply chain experts project44 showed that shipping delays from China to West Coast ports had been increasing since October. It takes longer to load container ships at their originating port, it takes longer for those ships to get to their destinations, and when they arrive they are stuck waiting for unloading – and manufacturers’ schedules fall further and further behind.
Another challenge is sourcing of materials. A shortage of semiconductor chips, which control electronics in a variety of vehicles, bogged down the automotive industry in 2021 and continues to plague heavy-duty truck manufacturing, for example.
The bottom line is that manufacturers are finding it difficult to meet the demand of an expanding construction market. That will leave potential buyers to either purchase a
new machine that they may not see until next year, or find alternatives to keep their businesses moving while the industry catches up again.
That may mean contractors turn to the used market to bolster their fleets – a market that, according to Ritchie Bros. in its year-end pricing review, saw prices jump 10 percent for large earthmoving equipment and 35 percent for medium machines through the end of 2021. Alternatively, there are some manufacturers for whom supply chain issues haven’t been as problematic, and contractors may give those brands a test drive.
There are indications that supply issues are slowly clearing up and could ease by early 2023, but until that time buyers will need to be creative about how they update and expand their fleets.
Lee Toop
Editor
ltoop@baumpub.com heavyequipmentguide.ca
