Just what the new normal for trailer building will look like was the topic for discussion when PowerTorque sat down with MaxiTrans CEO and Managing Director Dean Jenkins to talk about how the trailer business is travelling.
By October last year the MaxiTRANS customers had grasped the fact that the situation would remain like this for the long term and had to adapt to the new environment. After the lockdown in Victoria ended the economy seemed to get an extra kick and all of the suppliers to the trucking industry have found themselves busy coping with high demand for products.
“Are we running at record rates?” asks Dean. “The answer is no, but we are running at average numbers and we are coming off of really low numbers. That base reset we had at the start of Covid, as we all reduced our cost bases and JobKeeper helped us keep our numbers up, mean that now average numbers feel pretty good.
“Another thing which has helped us to keep going is our parts business. It is half of our business now, in profit terms. That’s a very stable business for us. It has helped our customers and, as a business, we have been lucky.”
This means the MaxiTRANS business, as a whole, is on a sound footing and Dean is looking for steady growth out of the current situation in a controlled manner. The truck and trailer market seem to be going through a steady growth phase at the moment, and MaxiTRANS just wants to grow with the demand.
This growth equates to the business taking on an extra 25 people each month. These new employees have been spread throughout MaxiTRANS, but most have been on the manufacturing side. Sourcing these number of personnel at the right quality is a challenge for the organisation. In fact, according to Dean, planned growth may be slowed by the fact that MaxiTRANS find recruitment hard at the moment.
“We are starting to see some cost inflation,” says Dean. “The international supply chain is a bit of a disaster and it creates challenges for all of us. Like all Australian trailer manufacturers, we get axles from China, Europe and the US and it is actually Europe and the US which have the biggest issues, from the supply point of view.
“There is a supply/demand challenge in Australia at the moment. Everyone slowed down a lot and then no-one was prepared for the uptick, which has happened. Then overlay international supply chain issues for everyone, plus port issues as well. Over the next six months I think there will be a bit of cost inflation around, led by raw materials.”
The trailer market is being buoyed by confidence in the trucking industry at the moment, however the nature of the market has changed. The trend to increased demand for curtain-siders has become much more pronounced in the last six months. At the same time the skel market is relatively quiet.
There has been a lot more interest in trailers designed to help with compliance for operators. Operators, especially the larger ones are buying trailers which make compliance easier. This trend is also being reflected in the truck market with more and compliance and safety equipment being fitted and specified.
“The other complexity which is out there is the whole Performance Based Standards (PBS) process,” says Dean. “The number of trailers built in Australia has been pretty consistent for quite a period of time. The freight movements go up but the number of trailers does not, because of PBS. What’s happening is operators are getting more freight per trailer.
“It’s a bit of a broken process, to be honest. We have customers, who have done all the right things, have trailers which they have paid for and then they sit in our yard for months. Associations are trying to get a way forward on this, they are trying but not to the efficiencies our customers expect”
“It’s a challenge for the industry, and while it remains a challenge for the industry, it will hold back investment.”
Any modal shift from road to rail may take a lot longer than has been predicted, reckons Dean. Any freight moving to rail is likely to be offset by the overall growth in the freight task, meaning the trucking industry will continue to expand.