Suez blockage could have serious effects on the auto industry
Tuesday, March 30, 2021
Although the blockage caused by the massive Ever Given container ship running aground in the Suez Canal has now been cleared, the automotive industry is bracing itself for further supply setbacks caused by disruption to one of the world’s busiest shipping routes, on top of issues caused by the pandemic.
Some 360 ships were delayed by the blockage, some of which will have been carrying either completed vehicles or components. With canal capacity limited to around 50 ships per day and the alternative being an additional 10 days sailing time around Africa, delivery delays are inevitable to both European car suppliers and manufacturers and to the aftermarket.
The effects of the delays may impact in three different ways:
Firstly, finished cars destined for the European market have been delayed with two giant car carriers, the Morning Celesta and the Hoegh London still waiting to enter the canal after several days. Other ships containing vehicles from Far Eastern car makers are on route and also likely to get caught in the back log.
Secondly, many ships will be carrying components made in the Far East and destined for European car plants. Most European cars will have critical components which originate in Asia, e.g. the batteries for the majority of electric and hybrid cars come from China, Korea and Japan. This could be a major issue for car makers already facing a shortage of semi-conductors, seating foam and other petroleum-based materials. This presents the very real possibility of short time working or temporary plant closures.
Thirdly, the delays will have some impact on the European aftermarket, although this is harder to quantify. Many European parts suppliers will source components from the Far East and parts makers will source raw materials and constituent components from Asia. How much of this may be caught up in the shipping backlog is not possible to estimate, but there is bound to be some impact, and this will have a knock on effect in the Irish market already struggling with availability issues cause by the post Brexit fall-out.
The Ever Given accident will also bring into focus what an interconnected world we live in and how one rather large spanner thrown into the works of global logistics operations, can have serious knock on effects.