Q3 2023 : Supply Chain Market Intelligence Report

RV Industry

• RVIA reports 2023’s new vehicle shipments are down almost 45% through the same time period in 2022, even in light of increase from July to August 2023. Retail prices of travel trailers are increasing but are doing so at a lower rate (3%) than the previous period (7%).
• The current 2023 shipment forecast remains at 297,100 units, which would be the lowest total in a decade. However, the 2024 forecast continues to increase, now up to 369,700.
• Manufacturers are listening to the requests for the ability to go off the beaten path with lithium batteries and ability to carry more items deeper into the wilderness. These trends continued to garner attention at the Dealer Open House in September.

Travel Trailer values were lower in the first half of 2023, with another steady climb as the year progresses.

Transportation & Manufacturing Updates

• High retail inventory and higher interest rates have slowed the freight market turnaround. However, the amount of trucking companies closing their doors has started to slow, which is a positive sign.
• Diesel prices have continued their rise of $0.83/gallon from a 2023 low in early July. This follows six months of price decreases to start out the year.
• Container rates continued to trend downward, due in part to insufficient demand and excess capacity in the existing fleets. Some China-US indexes have dropped 11-18% since mid-August.
• The UAW strike is something all industries are keeping an eye on, as a prolonged work stoppage could impact thousands of Tier 1, 2, and 3 suppliers as well as the transportation lanes that support these companies.

Meranti Market Updates – Cause and Effect

CAUSE: Global supply chain aftermath
Much of the Meranti/Lauan product has arrived and is sitting state-side. Due to global demand, container availability, and port congestion, much of this material was transported via break-bulk and experienced extended dwell times at the port, potentially impacting quality.

EFFECT: Wood quality could become a major concern for manufacturers who start to put their stateside supply of Meranti into production.

CAUSE: Political Climate
The ongoing non-renewal of GSP remains an influencer of price as Congress remains focused on other priorities.

EFFECT: There will likely be continued premiums placed on quality material sourced from Asia-Pacific locations.

CAUSE: Market volatility
Surplus inventory stateside and the rapid contraction in demand has created volatility in the entire supply chain, resulting in minimal harvesting of new quality logs, mills running at less-than-optimal rates, and allocation of shipping vessels to other goods. Compounding this is the expiration of concessions that will require renewal during Q1 2024.

EFFECT: Quality Meranti supply constraint is expected to begin late Q2/early Q3 as the RV industry returns to more normal volumes.

How To Navigate

• Monitor the quality of the Meranti/Lauan being used in production. With materials from unknown or non-standard sources, compliance could be a concern in addition to quality.
• Supply chain planning. As these contributing factors continue to impact the global supply chain and Meranti market, be sure to work with quality vendor partners to secure potential demand.