MARCO ISLAND, Fla — Times are good everywhere in the trucking industry and Chris Baer, president and CEO of Vipar Heavy Duty, confirmed that this applies to the aftermarket segment as well.
“It’s a good time to be in the truck parts business these days,” he said during the company’s annual conference in Marco Island, Fla. As an example he referenced one of Vipar’s distributors, Macpek, which just built a new 90,000-sq.-ft. distribution center in St-Augustin-de-Desmaures, near Quebec City.
He isn’t alone in the observation. John Blodgett of Mackay and Co. agreed with Baer during a presentation on the economy and the heavy-duty aftermarket. “We are in a boom phase,” he said, referring to that period following an expansion – a period which, historically, is a precursor to a recession.
Signs of instability include factors like rising inflation, volatile employment conditions, and trade tensions, he said.
“There is a new NAFTA agreement put together. There is a new chief in power at the [U.S. Federal Reserve]. How will he be different than the others? Where will he be focused?” he asked.
Still, economic fundamentals in the first six months of 2018 were solid, and all indicators suggest further progress through the end of the year as consumers continue to make strong contributions to overall growth. Business confidence also remains high. However, tariffs are the wild card, said Blodgett. “Negotiations continue on several fronts.”
It’s difficult to tell how long the boom phase will last. The indicators show the boom period might reach its pinnacle early next year.
The recession will eventually come, but the aftermarket segment “is where you want to be during a recession,” said Blodgett, because it is less volatile than the OEM segment. MacKay and Co. projects that the Class 6-8 market will grow by over 6% this year compared to 2017.
But there are also new players in the aftermarket, with the online retailer Amazon now offering truck parts.
“There are certainly a lot of non-traditional competitors, or new players, coming into our market that have impressive technologies and they have systems in place that address moving products quickly. What they lack, though, is that street level experience, and interaction with customers on a day-to-day basis,” says Jeff Paul, vice-president of marketing for VIPAR Heavy Duty.
“When a customer walks in and says, ‘This is what I have. How do I find what I replace it with?’, it’s not always keyed into a computer. It’s what the local parts professionals have in terms of institutional knowledge that differentiates their level of service.”
From a competition standpoint, Paul admits that players like Amazon certainly have good systems. They invest heavily and they have bright people. But he believes that “the traditional independent distributors can go toe-to-toe any day with the knowledge and expertise they deliver.”
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