From rising freight rates to an upcoming presidential election, many factors are expected to impact the United States OTR tire market in 2024.
In this MTD exclusive, executives from OTR tire manufacturers preview the coming 12 months:
Chris Rhoades, vice president, BKT USA Inc.: Not only is 2024 an election year, but the recent Red Sea crisis has caused shipping cost increases. General rate increases have already been announced by shipping companies and we expect surcharges to come into play within the next few months. Different segments of the OTR market will be impacted differently. However, if the supply from the Far East is going to be affected with longer shipping times, increased freight rates and lesser availability of containers and ships, then there may be a shortfall in supplies to meet customer demand. With respect to medium and large OTR tires, construction, aggregates and mining tire demand is expected to hold steady, unless another war impacts the world and the U.S.
Rob Seibert, president, off-the-road, U.S. and Canada, Bridgestone Americas Inc.: We anticipate labor headwinds to continue to affect the end user in 2024. However, we have seen that year-over-year industry employment continues to be on the rise, which correlates positively with the OTR tire industry. Global economic volatility has yet to subside, which may still impact the industry. But we do expect strong demand in the construction and aggregate segments this year, supported by the continued impact of the government infrastructure bill in the U.S.
Tony Cresta, director of product management, CMA LLC: As we enter 2024, our eyes are on the global macroeconomic trends and spikes in ocean freight. The good news is inflation has been trending down, but is still persistent. Just-in-time ordering and delivery to our customer base will be an important activity for us to support our partners through the market’s ups and downs.
Matt Futrelle, head of global business field, earthmoving, Continental Tire the Americas LLC: The market will likely continue to be challenging in 2024. We are looking forward to some of the infrastructure spending during 2024 and beyond. The cost of capital has increased, which can be challenging for capital-intensive businesses. This could surely be a headwind for the construction and mining industries. We are planning for growth, but it will only come with significant effort in 2024.
Loic Ravasio, Goodyear Tire & Rubber Co: Goodyear expects the overall forecast for the U.S. OTR tire market in 2024 to be flat compared to 2023, since there will still be some external pressures driving a level of uncertainty in the industry. However, there continues to be momentum within the industry, driven by innovative new products and solutions that help optimize performance and lower operating costs. With all the pressures on the industry, we expect to see a continued focus on maximizing tire spend with our digital and automated solutions tailored to the diverse needs of our customers’ different sites. We will continue to work closely with our customers and dealers to determine the right tires and solutions to keep OTR fleets moving and delivering for our customers in 2024.
Jimmy McDonnell, vice president of sales and marketing, Maxam Tire North America Inc.: We are forecasting moderate growth by taking market share, while not necessarily relying on the growth of the market itself. The original equipment manufacturers we work with are forecasting a contraction in the market, which could be a leading indicator of the market’s upcoming condition. Tire dealers should prepare for better conditions on replacement sales opportunities, given that new machinery sales are forecasted to be slowing down. Also we have recently seen some slowing down in inflation, which could lead to interest rate stabilization or reductions — allowing more investments and an overall improvement in economic conditions. However, since it’s an election year, many things remain unpredictable.
Jesse Burdett, market intelligence, OTR, Michelin North America Inc.: I think the OTR tire market will see slight growth (of) 1% to 2% in 2024. Spending from the infrastructure bill will positively impact OTR tire markets. Interest rates and the response of the housing market also will dictate the recovery of the OTR tire market.
Stephen Reynolds, OTR director, Triangle Tire USA: 2024 is an election year and that typically means reduced bureaucratic red tape that can slow down projects as administrations have historically attempted to put their best foot forward. We are expecting to see some of that come to fruition this year in the form of infrastructure legislation finally translating into some earth being moved. I think our dealer base feels the same, as we have already started 2024 seeing some heavy ordering being done. The OTR market has always been a “need it now” business model, so we will focus heavily on our own domestic inventory stocking levels in order to supply dealers in a timely manner as they need it. We feel like the best is yet to come.
Dhananjay Bisht, product manager – earthmoving, construction and industrial tires, Yokohama Off-Highway Tires America Inc.: I believe we will see continued growth in the construction industry in 2024, especially in infrastructure projects. If interest rates drop a bit, we will probably also see further growth in housing construction. Meanwhile, we expect mining to be strong, with high demand for aggregate for road projects and several newly commissioned American mines serving our growing need for elements like lithium.
Chan Phothisane, OTR national sales director, ZC Rubber America Inc.: We are keeping an eye on the situation in the Middle East. The recent spike in freight rates at the end of 2023 and in early 2024 will influence the customer’s purchase plan. If freight rates continue to increase, the customer will need to stock up at the current price. Election years are usually strange. Due to high interest rates and inflation, business owners are reviewing their budgets and trying to see where they can save. This has driven demand for lower-cost construction and mining tires. I believe the tire dealer’s biggest fear is getting stuck with high-cost inventory. My suggestion is to keep stock on your popular SKUs and fill in on the SKUs that you don’t want to move as fast.
