Daimler Trucks says it is facing enormous pressure in the supply chain

Disruptions in the supply chain are still raging across the globe, and the boss of the world’s largest truck manufacturer has warned that a lack of parts is slowing down the production of thousands of vehicles.

Daimler Truck CEO Martin Daum told CNBC on Wednesday that the current pressure in the supply chain is among the worst he has seen in his more than 25-year career, resulting in major bottlenecks across the company’s brand line.

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

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

The Mercedes-Benz Truck manufacturer said earlier this month that there were signs that a prolonged chip shortage appeared to be diminishing. Microchips, or semiconductors, are a critical component of modern automobile manufacturing, and they became in short supply during the height of the Covid-19 pandemic and the resulting factory closure.

But Daum said the shortage of other parts also continues to slow down the production of thousands of trucks across the 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 are desperately searching the world for these parts,” he said.

Disruptions in the supply chain cause a production lag at the world’s largest truck manufacturer, Daimler Trucks.

Bloomberg | Getty pictures

Inflationary pressures also weigh on Daimler Trucks’ production, as costs for energy and raw materials are now significantly higher – with some price increases easier to continue than others.

“We are currently pushing through these price increases on the raw materials side, so that we can at least keep our margins in that industry,” he said. The company is also in negotiations about an employee salary increase.

Nevertheless, the truck manufacturer, whose other brands include Freightliner, Western Star and Fuso, noted some bright spots. In the United States alone, Daum said, they see a pent-up demand for around 200,000 trucks as it continues to make up for supply shortages through 2020 and 2021.

“It, in my opinion, makes me optimistic that we will see a not so bad 2023. And not so bad is a German expression that it can be a good 2023,” he said.

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