Automotive shippers, vehicle retailers, OEMs, rental car companies and other carriers are all facing challenges on how to tackle the increasing disruptions to the automotive industry and its supply chain companies.
1. Shortage of Critical Parts
One of the biggest factors disrupting the supply chain right now is the shortage of critical vehicle parts. Despite production ramping up earlier this year following COVID-19-related shutdowns, this shortage has created new obstacles for the industry, including production delays — and many automakers are being forced to shut down again or pause production of certain models.
For instance, a lack of tire rubber, the foam used to produce many car seats and, of course, the shortage of semiconductor chips has left many in the automotive industry looking for new, innovative ways to move forward — whether that’s enhanced online services, more frequent outreach to existing and potential customers or improving technology to streamline the customer acquisition process.
2. Fewer New Vehicles
New-vehicle inventory dwindled at the height of COVID-19-related shutdowns when vehicle production essentially came to a halt. As restrictions slowly lifted, consumer demand for vehicles started to rise — and is still rising today, forcing dealerships and other vehicle retailers to find new, innovative ways to acquire inventory for their customers, including proactively asking customers if they’re interested in selling their vehicles. Often, such approaches require putting logistics in reverse to collect vehicles at customers’ homes or preferred pickup sites.
3. Tight Carrier Capacity
One of the ways retailers are expanding their inventories is by sending carriers out to collect vehicles wherever they are located, no matter how far away they are — even picking up one vehicle at a time. This means carriers are making more frequent, longer-than-usual trips — and making more stops along the way.
On top of these already tight capacities, carriers are feeling additional pressures stemming from rising fuel prices and an ongoing shortage of drivers — leading to increased carrier expenses and extremely tight capacity constraints.
4. Increased Fuel Prices
A few months ago, markets were caught off guard by the extension of oil-production cuts by the Organization of the Petroleum Exporting Countries (OPEC). This came at a time when fuel prices were already high and resulted in prices jumping another 12%.
Prices remain high, adding more stress and additional costs to carriers as they work to navigate tight capacity constraints. With carriers making more stops than usual and paying even more at the pump for each transport, fuel costs are cutting into overall earnings — forcing many carriers to raise transport fees to help offset the ongoing impacts to their bottom lines.
All of these major disruptors are leading retailers and carriers to partner with vehicle-logistics providers to help them with these transports as well as any additional services they might need, such as reconditioning, car detailing or title and registration.