May 10, 2011 - 8 years ago
By Supply Post
The costs of tires are on the rise, jumping nearly seven per cent in the last month alone. John Correia of Coast Tire and Auto Service says the price of tires is going up, regardless of size, tread or make, and the increases are not going to stop any time soon.
Correia says consumers should expect to pay at least $20 more per tire in the coming months, regardless of where they buy them.
The increased price has major consequences for the trucking industry.
With most trucks needing 18 to 22 tires at around $490 a pop, a price hike of even five per cent is substantial.
Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association, says the latest price swell only increases the trucking industry's woes. The ever-rising cost of fuel has been a major concern, he says, but now, "With tire costs going up, it's obviously difficult for a carrier to keep their head above water these days."
"You only budget so much, and now with tires ... It's very hard to recuperate," says Picard.
Donnie Fillmore runs a fleet of 40 trucks. He says his company, Fillmore Trucking, has felt a "significant" rise in the price of tires. On May 1, new tire prices rolled out, about seven per cent higher than last month's. Fillmore says tires have gone up between 20 to 35 dollars since last year.
"That's $550 bucks per truck per year," says Fillmore, a $22,000 increase on his already hefty yearly tire budget.
The only way to cope with higher costs, says Fillmore, is to charge more. "The rising cost gets handed on to the consumer. Money's got to come in before it can go out," Fillmore says.
Doug Morrow, owner of Milltown Trucking in Oak Bay, agrees. "With the higher cost of rubber, and the higher costs of everything coming, freight rates will have to increase."
Unable to be replaced by synthetic rubber, natural rubber is a crucial ingredient in tires. The bad news for drivers is the price of natural rubber has skyrocketed over the last year.
Greg Jagt is vice-president in charge of trade at Astlett Rubber. The Ontario-based rubber distributor says the cost of natural rubber is ten times what it was in 2001, the long-term average for rubber, says Jagt, is around 88 cents a kilogram. According to the Singapore Commodity Exchange, the going price for natural rubber on May 1 was $4.50 a kilogram.
The whopping cost of rubber translates directly into higher tire prices, as nearly 70 per cent of the world's natural rubber goes directly into tire manufacturing, says Jagt.
From the long-haul trucker to the soccer mom upgrading her winter tires, costs are being transferred to the buyer.
Unfortunately, the cost of tires isn't all that will be on the rise. As Fillmore warns, as the cost of trucking increases, so, too, will the price of goods truckers haul?