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Podcast

The State of the Heavy-Duty Aftermarket in 2022

Learn about some of the biggest challenges facing the heavy-duty aftermarket in 2022, and the importance of the aftermarket to commercial fleets.

Episode 176: We are at the Technology and Maintenance Council Annual Meeting in beautiful Orlando, Florida. The theme of the show is Electrifying Performance in Maintenance Management. In this episode we discuss the biggest challenges facing the heavy-duty aftermarket in 2022, and what we’ll continue to see through 2022.

My guest today is John Blodgett from MacKay & Company.  

MacKay & Company Logo, and  John Blodgett headshot. In this episode, learn about some of the biggest challenges facing the heavy-duty aftermarket in 2022, and the importance of the aftermarket to commercial fleets.

Guest Website: MacKayco.com

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Transcript of Episode:

Jamie Irvine:

You are listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost-per-mile.

We’re at the Technology and Maintenance Council Annual Meeting in beautiful Orlando of Florida. And the theme of the show is electrifying performance in maintenance management. My guest today is John from McKay & Company. John, welcome to The Heavy-Duty Parts Report. I’m so glad to have you here,

John Blodgett:

Jamie, good to be here. Thanks.

Jamie Irvine:

When I think of TMC and I think of the opportunity for us to get together it’s a little more special this time for me personally, but I think for the whole industry, there’s more people here than ever before. It’s exciting. We see representation at TMC of both dealers and the independent service channel. And that’s what I wanted to talk to you about because the independent service channel plays such an important part in keeping fleets on the road. So from your perspective, what are the biggest challenges facing the heavy-duty aftermarket in 2022 and as we move beyond 2022?

John Blodgett:

Yeah, probably the biggest challenges looking at 2022 is some of the challenges we had in 2021 is am I gonna be able to get the parts I need to meet the service requirements or just to distribute the parts to people who want them. You know, get a lot of talk about chips and other electronic components on vehicles, but there are other components having the same issues. And then the issues related to, if I can get the part, what am I gonna pay, or what am I gonna have to charge the customer for the part, because, inflation is in this industry as it is in every industry. So that’s another big challenge is the parts increases pricing wise and finding the parts are probably the two biggest challenges. And probably the third one, if it, it may even be bigger than those is finding the people to sell the parts and work the counters and service the vehicles, because there’s a lot of competition for people in positions out there.

Jamie Irvine:

Yeah, the trucking industry certainly hasn’t been immune to that. I mean, you look at other industries, for example, we were just sat a restaurant the other evening and they said that it was an over an hour wait. And we looked in the restaurant and it was half empty. It wasn’t because there was too many people. It was because there wasn’t enough servers. And I thought, you know, that industry, but our industry is the same, your drivers, parts technicians, repair technicians, we need so many people.

John Blodgett:

It’s funny, you said that I was at a restaurant the other night and they said we’re closing down completely for the next day because our people have been working so hard, but in our industry, if you’re a service provider, you can’t just shut down for a day or take two, so we’re gonna give our employees some time off. That’s not really an option because trucking’s so integral to everything.

Jamie Irvine:

So this is The Heavy-Duty Parts Report. We like to talk about parts as much as possible when it comes to the demand. Like right now we have this kind of perfect storm where we had supply fell because of the pandemic and related issues. Demand continue to go up. That creates inflation in the prices. Is the demand for parts in the aftermarket going to continue to grow as we move through 2022 and beyond?

John Blodgett:

Yeah. Our forecast has demand growing in 2022. Well, it has it growing. We don’t forecast out recessions, but outside of recessions, we have demand going for the next five years. Primarily because we’ve been putting so many vehicles into the marketplace, and if we keep the, what we call the utilization rate up, the use of those vehicles up, they’re gonna be eating more parts and tires and lubricants. Now our forecast for 2022 over 2021 is to have the market be up about 7% and a good chunk of that is price, but there there’s still, percentage of that is up in units as well, just based on the demand. So yeah, we’re optimistic about the market. I mean we put together our forecast before what happened in Ukraine and oil and everything else. So, you know, we’ll adjust in six months if, you know, depending on how that impacts or if it impacts, but there’s always something going on.

Jamie Irvine:

You see that wide perspective of the industry with all of the research that your company does and what I’m kind of interested in, in knowing just from the data, we know kind of in our hearts, how important the independent service channel is to the trucking industry, but how does the data support that belief and feeling that we have, especially the people who actually rely on for their jobs?

John Blodgett:

Well, so we survey, we do complete thousands of surveys with fleets each year, and we ask them about operations of their vehicles and, and that varies by vocation and vehicle class, but we also ask them how they service their vehicles and what they do in-house and what they outsource and if they outsource where they go and the independent service channel is an important factor in that. And you know, occasionally you hear concerns about that, you know, the independent service channel’s gonna get pushed out of this market. And I just don’t think that’s ever gonna happen. I think there’s always an opportunity for the independent channels, because I don’t think the OE channels are gonna be able to cover everything anytime soon. So there’s always gotta be another option out there. And there’s so many smart people in the independent service provider channel that are coming up with creative ideas or will go above and beyond what’s sometimes offered in the OE channel. So it’s an important channel they’re growing as well, their opportunities.

Jamie Irvine:

All right. So it’s not just a wish, there’s actually data to back that up. So we’re just gonna take a quick break and we’ll be right back.

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We’re back from our break. And before the break we were talking about the trends in the industry. We’re so happy to be here at TMC in person, John, this is great. When we look at the Annual Meeting and we look at the theme about electrification in the trucking industry. One thing I noticed about their theme is they added on that maintenance management at the end, right? So we understand electrification is coming, but there’s that role of how do we maintain these vehicles going forward? So what are your thoughts on that?

John Blodgett:

Yeah. Well certainly there’s gonna be some big decisions eventually down the road. I think it’s very interesting, the amount of resources and efforts and money that’s being put towards electric vacation of vehicles and not just electric, but other technologies as well. And certainly there’s some big goals put out there by fleets as to what they’re gonna for in some cases for alternative powered vehicles and what the vehicle manufacturers say, they’re gonna sell by a certain point in time. And even some government like California, other places saying we’re gonna, you know, allow these types of vehicles to be operating in our universe from an aftermarket side. We don’t see anything changing real quick down the road because the nice thing the aftermarket is we always know what gets sold by type of vehicle by type of power. So we know when that change is coming, and our forecast right now goes out for five years.

So we’re not seeing it yet, but we’re surveying our fleets and we’re picking their brains about what they’re testing and what they’re looking at. And certainly, you know, beyond five years we will start seeing more of it and I’m talking six or eight markets so that, you know, it’s not gonna switch as quickly as transit or the light duty markets, but it’s gonna have an impact. It’s gonna have an impact from the standpoint on the number of parts, moving parts on the vehicle and certainly an impact on how you service the vehicles. And there could be a whole new education and training involved with that. And fleet management is gonna have to keep up on that and understand what we are telling folks right now is, you know, we don’t see it coming as quickly as maybe as some other people do, but that’s gonna vary by who are your fleets and what vocation are they in or where are you based? Because there’s places in the country they’re gonna switch faster than others. So better be aware of what’s going on in your market related to that.

Jamie Irvine:

That makes a lot of sense. You know, earlier you mentioned and how one of the big challenges is the shortage of people. I think if you went back even just five years, there was a general idea that all of this electrification and change and automation that was coming to our industry was gonna rob us of a lot of jobs. But in some ways I have to wonder if we don’t need this technology just to be able to keep going forward because I know so many of the people that I grew up with in the industry that mentored me and they’ve all retired and there’s not enough people to replace them anyway. So is that this is actually gonna be part of the solution, not necessarily part of a problem when it comes to people.

John Blodgett:

Yeah. I think you’re right there. I mean, you just think about it from your personal life and you used to think about it, you know, 20 years ago and you talk about the technology’s coming down the road and it’s like, your life’s gonna be so much easier. You’re only gonna have to work four days a week or four, four hours a week, a day or four days a week or whatever. We don’t, we work a lot more, but we can do a lot more because of the technology and it enables us to do that much more. So I think you’re right. I think it just it’ll help us bridge those gaps and those that lost of some of the older knowledgeable technicians and help fill some of those gaps.

Jamie Irvine:

So we’re at TMC. What’s been one of the highlights of the show?

John Blodgett:

Well I just got here last night, so I’ve just started walking around. But it’s interesting. There’s a number of new companies out there that are artificial intelligence gathering, all sorts of data, but promoting the idea, gathering all sorts of information from fleets and using that data to better handle maintenance or better handle drivers or avoid accidents. Think that’s interesting. I just went by one of the truck manufacturers boost and they had charging stations there. And so first time I’ve ever picked up a charger on a charging station. I don’t have an electric vehicle so I don’t, I haven’t done that before. So that’s new to me, probably not most people, but I thought that was pretty interesting as well. But you’re right, I like the traffic out there. I was at the show in Cleveland. I think that was good for them to TMC management to have that show in Cleveland that unfortunately it didn’t, you know, a lot of fleets weren’t able to get permission probably to go to the show. But I think we’re hopefully finally past that. And it seems like the traffic’s pretty good down there and people are excited to see everybody in person. So I think hopefully we’re done with the COVID stuff and we’ll move on.

Jamie Irvine:

From your perspective, why should someone listening consider becoming a member at TMC?

John Blodgett:

I go to a lot of industry events, not just in the trucking industry, but we also work in the off highway ag and construction equipment markets. And I don’t know of another show that packs so much information in such a tight timeframe. And you know, my wife sometimes is like, oh, you’re, you know, I live in Chicago, I’m going to Florida for three days, and she’s like kidding me, oh you get to go to Florida for three days. You don’t understand, at TMC, we started seven in the morning go to nine or 10 at night. It’s a long day, but you get so much value in that day between the trade show. So you can talk to all your suppliers of your fleet. I’m not a fleet obviously, but the breakout sessions of how much you can learn on the technology, the vehicles and the people you can interface with and the networking you can do. It’s from my standpoint, if you’re in this industry, it’s a no-brainer from that standpoint.

Jamie Irvine:

You’ve been listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. We’ve been speaking with John Blodgett from MacKay & Company. To learn more, visit McKayco.com. Don’t worry links are in the show notes, you’ll be able to click right through to their site. John, thank you so much for being on The Heavy-Duty Parts Report. I’m really glad to have you here.

John Blodgett:

Thank you, Jamie.

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