By Jeffrey Rasmussen
The U.S. tarpaulin (tarp) and truck cover market entails a very diverse set of applications. Flatbed trailer truck covers are often used to secure heavy cargo, such as lumber and steel; roll-up truck covers or tarps are usually used on dump trucks to secure heavy loads, such as dirt and gravel. Some of the other applications include hay tarps and other agricultural covers, tarps and liners used in the waste industry and in construction, garden tarps, covers for sports fields, boats, gym floors and hurricane protection.
Making the distinction
Truck Covers. Tarpaulins and truck covers (also referred to as truck tarps) are distinctly different product segments. Truck covers are designed and custom made to cover and protect specific loads carried by specific trucks. Truck covers can make carrying loads in flatbed trailers, dump trucks, and other types of trucks much easier and, of course, safer. Flatbed trailers, often covering cargo such as lumber and steel cables, use waterproof truck covers that have grommets through which cables can attach the cover to the truck. Dump trucks also need to be covered with truck covers to secure their loads. Roll-up truck covers (tarps) usually used on dump trucks roll up into a cylinder for storage behind the cab of the truck and can be pulled out and secured to the other end of the bed to cover the truck’s cargo.
In general, truck fleet operators tend to prefer heavier vinyl-coated fabrics (mostly polyester) in 18- or 22- ounce-per-square-yard weights because they are less likely to succumb to wind-whip and are believed to be more durable than lighter weight (14 ounce-per-square-yard) vinyl-coated polyester.
Tarpaulins (tarps). Tarpaulins are generally recognized as a commodity. There are numerous applications for tarpaulins, often used to protect surfaces from wind, rain or sunlight, such as those used on baseball fields to protect the grass from heavy rainfall, and as groundsheets and flies for camping tents. The military uses tarps covered with camouflage foliage specific to their areas of operation.
Cotton tarps were the traditional type of tarp used before the advent of polyethylene materials. More vulnerable to rot and mildew, they’re also heavier when wet, but the associated swelling usually closes up minute holes in the fabric, which means that wet cotton is more waterproof than dry cotton. Most tarps today are made from polyethylene or polyester coated with latex or vinyl, largely due to cost effectiveness, and also strength and longevity gains.
Some tarps sold today are not of the traditional fabric variety, but instead consist of a laminate of woven polyethylene plastic sandwiched with sheets of polyethylene material known as poly tarp. Waterproof and resistant to stretching, poly tarp used for construction sites are some of the strongest, most durable tarps for protective purposes. Many are treated to be fire retardant. On a construction site, fire-retardant tarps are especially useful for keeping workers warm outdoors in the winter. A fire-retardant tarp can be wrapped around an area heated by forced air heaters, safely keeping the warm air inside the enclosed area.
Mesh tarps, also called shade cloth, are often used in applications requiring light shade and good airflow. Mesh tarps are often reinforced with a vinyl laminate to provide exceptional strength and protection from rot and mildew. Mesh tarps are popular in the nursery and landscape industry and are also used for the top and sidewalls of backyard canopies, cabanas and market display booths.
The downward squeeze on sales and profit margins for U.S. tarpaulin and truck cover fabric suppliers and manufacturers in 2009 was due primarily to the significant downturn in the economy—largely because of the poor residential (lack of new housing starts) and nonresidential construction markets. The poor economy has also been the driving force behind the high cost of raw materials and fuel prices over the past few years. In 2009 there was an estimated 10 percent decrease in demand for tarps and truck covers used on trucks to transport cargo (such as lumber, steel and glass) from manufacturers’ factories to fabricators for items like doors and windows. Truck fleet operators slashed their fleets and workforces in 2009 in the face of falling demand. Thousands of small firms closed, while survivors trimmed fleets an average of 14 percent.
Yet, after the plunging recession of 2009, many trucking company CEOs report that the freight environment in second quarter 2010 has improved and that capacity is tightening. Demand for tarps and truck covers in 2010 is expected to be up 6-8 percent, as manufacturing, retail, and residential construction sales have rebounded moderately. Much of the growth for 2010 stems from strong growth in new home sales during January to April 30, due to the first-time homebuyer credit. After the credit expired on April 30, demand for new houses plunged, and through August 2010 did not show any upside momentum.
Unfortunately, a shortage of trucks and drivers in 2010 is delaying truck deliveries of products and raw materials across the United States, and raising freight costs. The shortage of trucks and drivers has resulted in some freight transport firms turning away two to three jobs a day. This problem is not going away any time soon as the shortage of drivers is projected to reach 400,000 drivers by 2012.
This is defying a slow economic recovery and a near 10 percent jobless rate that should supply a large pool of unemployed construction and manufacturing workers. Shortages are likely to get worse when the economy steps up its improvement and new rules take place later this year that will make it tougher to hire drivers with poor safety records. Meanwhile, thousands of older drivers retired when they were laid off or saw their workloads cut during the economic turmoil in 2009.
Trends signal uncertainty
Results from an IFAI tarpaulin and truck cover supplier/manufacturer climate survey in August 2010 showed a very competitive environment for tarpaulin and truck cover suppliers and manufacturers in 2010, driven largely by the slow economy, inexpensive imports of commodity tarps from China, Korea, and Vietnam, as well as higher raw material and energy prices throughout 2010, although polyethylene prices eased in the third quarter of 2010. Polyethylene producers have pushed for price increases into the fourth quarter of 2010, but buyers were uncertain whether the pace of the economic recovery would be sufficient to allow the increases.
According to IFAI’s climate survey of suppliers and manufacturers, tarpaulin and truck cover businesses were still impacted by the economic downtown in 2009. A shrinking market fired increased competition, resulting in lower prices and revenues. Mills were faced with reducing expenses to maintain profit margins. With a slow housing and construction market, fewer building materials were shipped—and fewer tarps were used.
The economic downturn also prompted a tight credit market that squeezed available capital and caused slower sales growth, and stricter government emission standards increased the price of new trucks. With tighter credit, smaller carriers found it more difficult to get loans for higher-priced trucks.
With higher raw material prices—especially fuel—sales dropped and more trucks were idle, which also contributed to slower tarp sales. An increase in imports of cheap, commodity tarpaulins contributed to smaller market shares, and with a shift from temporary grain storage to steel bins, there were weaker sales for grain covers.
Results in 2009-2010 from IFAI’s tarpaulin and truck cover supplier and manufacturer climate survey show:
- 68 percent reported unfavorable sales growth in 2009
- 16 percent reported favorable sales growth in 2009
- Sales expectations improved significantly in 2010 as 65 percent report they expected favorable sales in 2010; only 13 percent reported they expect unfavorable sales in 2010
2009 was a difficult period for tarpaulin and truck cover suppliers and manufacturers, but respondents expected sales and profit margins to be moderately better in 2010 and 2011. They’re also hoping to more easily access credit to invest in their businesses. Congress passed a bill in September 2010 that would create a $30 billion fund to help often-starved small businesses cut their taxes, and help community banks with less than $10 billion in assets increase lending to small businesses hurt by the recession and the 2008 Wall Street crisis.
The home building industry may be years away from recovering from the excesses of the housing boom, which occurred from 2004-2006. It may take one to four years for the housing market to recover due to the large inventory of houses—both on the open market and held by lenders—stemming from millions of foreclosures and distressed properties, which shows little sign of abating.
However, the economy is expected to slowly continue to improve—a projected 2.6 percent GDP in 2010 and 2.3 percent in 2011—much better than the -2.6 percent that occurred in 2009. The U.S. tarpaulin and truck cover market should expect 3-5 percent growth in 2011 as the broader economy continues to improve. More robust growth will be constrained by high unemployment (averaging 9.7 percent through August 2010) and weak home-building activity in 2010.