HomeBusinessDaimler Trucks says it faces huge pressure on its supply chain

Daimler Trucks says it faces huge pressure on its supply chain

Supply chain disruptions continue to spread across the world, and the chief of the world’s biggest truckmaker has warned that parts shortages are slowing production of thousands of its vehicles.

Daimler Truck CEO Martin Daum told CNBC on Wednesday that the current supply chain squeeze is among the worst he has seen in his more than 25-year career, causing bottlenecks major in the company’s suite of brands.

“We are facing huge pressure on the supply chain,” said Daum, whose trucks are used for other vital industries such as logistics and construction.

“I would say this is one of the worst years in my long career in trucking, where sometimes we have to hit a truck three, four times to add the missing parts,” he added.

Truckmaker Mercedes-Benz said earlier this month that there were signs that a prolonged chip shortage appeared to be easing. Microchips, or semiconductors, are an essential part of modern car manufacturing, and they fell in short supply at the height of the Covid-19 pandemic and the resulting factory shutdowns.

But Daum said shortages of other parts also continued to slow production of thousands of trucks at its international network of factories.

“We have, in a few factories, over 10,000 trucks where one or two parts are missing and we are desperately looking for those parts around the world,” he said.

Supply chain disruptions are causing a production backlog at the world’s largest truck maker, Daimler Trucks.

Bloomberg | Getty Images

Inflationary pressures are also weighing heavily on Daimler Truck’s production, as energy and raw material costs are now significantly higher, with some price increases easier to pass on than others.

“Right now, we’re pushing these price increases on the raw materials side, so we can at least maintain our margins in that area,” he said. The company is also in negotiations over employee salary increases.

Still, the truckmaker, whose other brands include Freightliner, Western Star and Fuso, noted some positives. In the United States alone, Daum said, he’s seeing pent-up demand for some 200,000 trucks as he continues to catch supply shortages through 2020 and 2021.

“That, in my opinion, makes me optimistic that we will see a not too bad 2023. And not too bad is a German expression because it could be a good 2023,” he said.

Daimler Truck reported an 8% year-on-year increase in first-quarter sales last month, with group revenue up 17% over the same period.

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