Semiconductor delays are now impacting new car deliveries due to a railway shortage

The automotive industry is confronting a fresh hurdle as a scarcity of railroad cars is resulting in delays in the delivery of new vehicles. This shortage has left over 70,000 newly manufactured vehicles stranded nationwide, unable to reach their intended dealerships.

The issue has prompted the Alliance for Automotive Innovation, the industry’s lobbying group, to request intervention from the US Surface Transportation Board.

The scarcity of rail cars is causing significant concern, especially considering that nearly 75 percent of new vehicles and 1.8 million carloads of auto parts are typically transported via freight rail each year.

This backlog of completed vehicles is disrupting the automotive supply chain, which is already grappling with the aftermath of the semiconductor chip shortage. The resulting delays in vehicle deliveries are having a profound impact on suppliers, employees, and the overall U.S. economy.

The issue stems from a scarcity of autoracks, which are specialized rail cars designed to transport vehicles. Rail transportation is preferred over carrier trucks due to its cost-effectiveness and quicker delivery times.

An autorack rail car has the capacity to carry 12 to 18 vehicles, whereas a truck hauler can only accommodate a maximum of seven to eight vehicles.

The shortage of rail cars presents a complex challenge due to the extensive rail network in North America and the intricate nature of rail shipping. With multiple destinations and routes involved, coordinating rail shipments becomes a complex puzzle.

Autoracks, which are integral to the transportation of vehicles, are part of a shared pool managed by TTX, a company responsible for administration. It’s worth noting that manufacturing new autoracks is a time-consuming process, typically taking two to three years, which means there is no quick solution to address the shortage.

The problem’s roots lie in a combination of factors. One of the main contributors is the rapid recovery of new-vehicle production following the semiconductor chip shortage, which has surpassed the expectations of most railroads.

Furthermore, alterations in supply chain patterns, like diverting vehicles through west coast ports instead of the east coast, have led to longer-than-anticipated rail car journeys, causing additional complications.

In the midst of these challenges, several automakers are still grappling with the repercussions of the microchip shortage. Volkswagen has recently stated that the chip shortage will continue to affect their car sales throughout 2023.

Similarly, automakers such as Cadillac, Ford, and Genesis have expressed that the shortage has compelled them to restrict or omit popular features on certain vehicle models.

Semiconductor delays refer to the disruptions in the supply of semiconductor chips, which are essential components used in various electronic devices, including automobiles.

The global shortage of semiconductor chips, which began in 2020, has had a significant impact on various industries, particularly the automotive sector.

In the automotive industry, semiconductor chips are crucial for the operation of advanced features and systems in modern vehicles, such as infotainment systems, advanced driver-assistance systems (ADAS), and engine control units.

However, the shortage of semiconductor chips has led to production bottlenecks, forcing automakers to reduce or halt production temporarily.

New car deliveries are now facing additional challenges due to a railway shortage. Rail transport is a preferred method for moving new vehicles due to its cost-effectiveness and faster delivery times compared to carrier trucks.

However, the scarcity of rail cars, specifically autoracks designed for transporting vehicles, has caused delays in the delivery of new cars to dealerships.

The shortage of autoracks, which are specialized rail cars for carrying vehicles, is a complex issue. Rail shipping involves intricate coordination of multiple destinations and routes, making it a challenging task. Autoracks are part of a shared pool managed by a company called TTX.

Manufacturing new autoracks is a time-consuming process, taking two to three years, which means a quick fix is not feasible.

The combination of semiconductor delays and the railway shortage has created a significant disruption in the automotive supply chain. It has resulted in a backlog of finished vehicles, leaving them stranded across the country, unable to reach dealerships.

This backlog not only affects automakers but also has ripple effects on suppliers, employees, and the overall economy.

The impact of semiconductor delays and the railway shortage goes beyond the automotive industry. It affects various stakeholders, including automakers, suppliers, dealerships, and consumers.

Efforts are being made by industry associations and government bodies to address these issues and mitigate their impact on new car deliveries and the broader economy.


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By Ryan

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