On trucking and sustainability: A conversation with Michelin's Pierluigi Cumo

SONOMA, Calif.—For the commercial tire space, the year ahead should feel familiar.

Yes, it's likely that 2024 will shape up to look a lot like 2019 in terms of demand.

But there's more to the story. At least, there is for Michelin North America Inc.

Because the tire maker is continuing to push its products and innovations further as it builds around sustainability and the value propositions it brings, said Pierluigi Cumo, vice president of business-to-business products.

Cumo will keynote Rubber News' International Tire Exhibition and Conference, set for May 14-16 at the John S. Knight Center in Akron. His first-day presentation, "The Future of Sustainability in Transportation," will explore the sustainability trends and technologies having the biggest impacts on the tire space, while offering insights into how tire makers are responding.

During Michelin's recent Sustainability Summit, Rubber News Managing Editor Erin Pustay Beaven caught up with Cumo. They discussed the trucking industry, the commercial tire sector and the sustainability that links both.

Here are three key points from their conversation.

Sustainability isn't just for tires.

And just as the automotive industry is working to find its more-sustainable mobility groove, so too, is trucking.

But unlike the passenger vehicle space where BEV technology is the clear front runner for more-sustainable propulsion, commercial trucking is figuring some things out. Which makes that sphere an exciting place to be.

"The transformation of the transportation industry is a big (thing), and one that is absolutely not fully fleshed out in the sense of how you build the (total cost of ownership), or what is the best application of these vehicles and how we run the day-to-day," Cumo told Rubber News. "In our case, what does that mean for tires? I think there is a lot to be figured out in that space.

"Probably not as exciting is that it is going to be a very, very slow-motion move for many decades. … We (as the transportation industry) are in the very beginnings as we figure things out and we figure technology out."

In the meantime, he said, expect Michelin to do the same—figure out some technology.

Because the tire maker is 100-percent committed to sustainability. And that means finding ways to leverage its expertise in high-tech materials, engineering, manufacturing and supply chain to deliver more sustainable solutions to fleets and drivers.

With that in mind, you can expect to see Michelin bringing forward some new products, more sustainable products. The kind that deliver on energy efficiency while extending their service lives.

Cumo pointed to the Michelin X Line Energy Z+ as proof. The steer tire, which has roots in a partnership with Daimler, delivers a 12 percent reduction in rolling resistance, while showcasing improved durability—lasting up to 1 million miles and through four retreads.

Simply, he said, expect to see more of that from Michelin.

"This is a good time to be in the truck side," Cumo said. "We are renewing a significant part of the portfolio—or a majority of the portfolio—over the next five years. So it is going to be launch time over and over again in that space."

Michelin, though, isn't limiting its vision or expertise to new tire products.

Because as part of its on-going growth strategy, Michelin intends to build success in the around and beyond tire spaces. So don't be surprised if you see the tire maker taking the lead on hydrogen technology, which just may end up being a more sustainable solution for trucking.

When it comes to the commercial tire space, nothing compares to North America.

According to the Trucking Industry Associations, trucks moved about 73 percent of U.S. freight in 2022, accounting for around 11.46 billion tons—or $940.8 billion in gross freight revenues (counting primary shipments only).

"I have worked in other industries, in other segments and in other countries. Nothing is like the U.S. market—well, I haven't worked in China," Cumo said. "For all the Western markets that I have worked in, I would say this is—in size—unrivaled by a very big margin."

So in the end, it is the sheer size of the North American market that is the opportunity, Cumo said.

Yes, that means greater opportunities for tire sales. But because the market is extremely competitive, it challenges Michelin to innovate and lean heavily into its R&D expertise to bring the premium products that allow it to stand out and win greater market share.

And that, he said, is where the possibility of sustainable comes in.

Because sustainability brings with it unmatched value propositions. He pointed again to the Michelin X Line Energy Z+ and the cost savings it brings with its reduced rolling resistance, increased service life and optimal retreadability.

"Some of the larger fleets have been increasing the share of retreads and the total business in the past years, which have been very good for us," Cumo said. "And we obviously try to play in that space when we sell total cost of ownership. Yes, you buy the new tire, but if I have this amazing casing that is going to last one more retread, it would be foolish not to sell the value of that and not demonstrate the value of that."

But North America—brimming with possibility—also comes with its fair share of challenges. One in particular.

"The challenge that we see is concentration of your customers. Because then your customers are massive," Cumo said. "We sit and talk with fleets that are the size of Michelin or half the size of Michelin. The bargaining power within that scenario is very different."

That's why it all comes back to quality and that sustainability Michelin builds into its tires.

"For us, we really need to have a very strong product, a very strong business case to have a discussion on a good solution that is going to be good for the customer," Cumo said, "but it is also going to be beneficial for Michelin."

The trucking industry had itself some pretty darn good years there in the wake of the pandemic. But now that the dust has settled, the industry has slipped back into that familiar place—think 2019 levels of volume and demand.

It's easy Cumo said, to want to compare year-over-year numbers and become discouraged. But really, a return to 2019 normal isn't a bad thing.

"People quickly forget what happened four years ago when you have three years that were absolutely amazing in the industry. They have very short memories," Cumo said. "(Last year,) replacement and freight demand was above 2019."

For 2023, Michelin reported that OE truck tire demand across North America was down just about 4 percent year-over-year. Meanwhile, replacement truck tire demand fell by 15 percent throughout 2023 as dealers worked through their massive inventories.

And while Michelin doesn't expect inventory backlogs to continue in 2024, the company isn't predicting a massive uptick in demand, either. Just a return to normal.

"When we look at where the market is likely to go this year, we don't expect a recovery," Cumo said. "We expect OE to slow down because people are not going to be buying trucks, there are too many of them out there. … There is a lot more capacity in the market than there is demand. And that is going to take a while for the market to adjust to.

"For us, though, there is still demand. If there is anything, I think there is more accountability of what we provide the fleets. And fleets are constantly assessing 'are we in the right contracts,' and 'do we have the right partners or not?' They are measuring everything and looking for every ounce of optimization they can find."

So Michelin, he said, plans to deliver it.