World’s largest truck maker says it’s facing enormous supply chain pressure

Supply chain disruptions are still rippling across the globe, and the head of the world’s largest truck maker has warned that parts shortages are slowing the production of thousands of its vehicles.

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

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

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

The Mercedes-Benz Truck maker said earlier this month that there were signs that a prolonged chip shortage appeared to be easing. Microchips, or semiconductors, are a critical component of modern auto manufacturing, and they fell into short supply during the height of the Covid-19 pandemic and resultant factory closures.

But Daum said that shortages of other parts are also continuing to slow the production of thousands of trucks across its international network of factories.

“We have, in a couple of factories, more than 10,000 trucks where one or two parts are missing and we desperately search the world for those parts,” he said.

Inflationary pressures, too, are weighing heavily on Daimler Truck’s production, as the costs of energy and raw materials are now significantly higher — with some price hikes easier to pass on than others.

“We are, at the moment, pushing those price increases on the raw materials side through, so we can at least hold our margins in that business,” he said. The company is also in negotiations over employee pay raises.

Still, the truck manufacturer, whose other brands include Freightliner, Western Star and Fuso, noted some bright spots. In the United States alone, Daum said, it sees pent-up demand for some 200,000 trucks as it continues to catch up with supply shortfalls 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 for it could be a good 2023,” he said.

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