What else can possibly go wrong in the global auto industry supply chain?
A massive container ship became stuck sideways in the busy Suez Canal last week, the latest symbol of a supply chain stretched to its limits as additional assembly lines shut down because of an unabating worldwide shortage of microchips.
The mishap now combines with a global shortage of shipping containers, U.S. port congestion and a March 19 fire at the vital Renesas Electronics semiconductor factory in Naka, Japan, to increase the pressure on U.S. vehicle inventories. Honda, Nissan and Toyota said last week they were assessing what effect the shutdown of the Renesas plant would have on their production.
The Suez Canal may be half a world away, but the impact will be felt on the U.S. auto industry, warned Mark Fulthorpe, executive director of global light-vehicle production forecast at IHS Markit.
The blockage of the canal — a vital logistics link between Asia and Europe — by the enormous Taiwanese vessel Ever Given, left dozens of cargo ships and several vehicle carriers stuck on both sides of the waterway.
"The Suez situation will add to the burden faced by the industry," Fulthorpe told Automotive News. IHS was already predicting a potential output loss of 1.2 million vehicles globally in the first quarter because of supply constraints — mostly as a result of the worldwide shortage of microchips.
The industry was holding out hope that April would mark the peak of industry disruption, followed by a gradual normalization of supplies in the third quarter, Fulthorpe said.
That timeline was disrupted by storms in the U.S., particularly a historically bad one across Texas that further crimped the flow of both semiconductor chips and petrochemical-based materials, such as coatings and resins, Fulthorpe said.
The combination of problems has darkened the outlook for vehicle production, even as U.S. demand surges for light vehicles despite inventory challenges and higher transaction prices. So far, sales in the first quarter are holding up, analysts said in their March sales forecasts.
"The broader question is how much more can we take" on the supply-chain side, asked Tyson Jominy, vice president of the Power Information Network at J.D. Power. "It started with the coronavirus and it's moved on to computer chips. And we've got resin, and the Suez Canal, and who knows where it's going to end and what the next one's going to be?"