Supply chains are still disrupted in today’s “new normal”. The Covid-19 pandemic continues to wage a war on the transportation industry, increasing delays for new cars, auto parts, furniture and appliances. Chinese lockdowns and the Ukraine conflict add to the issue with items taking longer than usual to be manufactured and ultimately reach their destination.
The majority of the Chinese population has been locked down in an attempt to stamp Covid-19 out of the region. New car delays have exceeded 8-months for some models and brands moving through Chinese ports, including Shanghai. With more vehicles delayed in overseas ports, freighters begin to face traffic, creating even further congestion as they frantically try to unload/load current and incoming ships while operating with labour shortages.
On top of this, ports have suffered from severe weather events such as tropical storms in the South China Sea, halting trading and forcing port closures altogether. Although these storms typically resolve after a few days, it adds to the increasing pressure that international ports are currently facing.
Ukraine specifically contributes to vehicle components used in the production Volkswagen, and has been affected since March earlier this year as some critical parts have been delayed from its suppliers. Ukraine is also one of Europe’s largest suppliers of wire harnesses. This critical equipment groups the cars cables together that run throughout the entire vehicle. Volkswagen and many other manufacturers are scrambling to find solutions to remedy these delays, however, with established relationships, contracts and supply chain its hard to make short term changes.
New car microchip shortages continue to delay the development of vehicles across the transportation industry overseas. This product is a time intensive development and has high demand throughout the technology industry as many electronics rely on this technology, especially ‘smart’ products such as dishwashers, TVs, washing machines and other appliances.
Some companies are trying to adjust the way they work around the microchip shortage, for example, certain car manufacturers are considering to opt-out of the smart technological features of their cars for a short time period. For example, not including augmented reality features in a rearview camera, or removing USB ports. Then, once microchips are more reliable and accessible, these features would be implemented again. However, car manufacturers have noted the reluctance to do this and see it as a last resort.
Ultimately, it’s difficult to determine when new car delays will begin to resolve themselves. Although there are some potential solutions car manufacturers are trying to implement, these are only bandaids to the major damage the industry has suffered in the last 24 months.