One of the most severe problems that companies dealing with transport face is the demand for more trucks. A demand which cannot be met due to their lagging production. And why is the production slowing down, you ask? Chip shortage continues to curtail truck production, all due to a unique confluence of circumstances and bad luck.
The necessity of chips
As any experienced transportation company can tell you, having a solid truck fleet is the most crucial thing in the business, which the current circumstances are making very difficult to obtain. However, why exactly do trucks require chips to be made to begin with? After all, trucks have been around for a very long time and for most of this period, they did not require any chips in their production. Modern trucks are naturally made to be far superior to their predecessors. A significant part of why this was possible to achieve is their reliance on electronics and chip technology. Nowadays, the inclusion of chips in cars allows you to handle them more easily, monitor every metric of your vehicle, track your position and plan out the most optimal route with the help of GPS and more, all of which are crucial for truckers.
Causes of the shortage
Lack of supplies
Ironically, chip shortage continues to curtail truck production primarily due to a lack of resources used to make them. This is directly related to the still recent breakdown of worldwide logistics. With a sudden loss of supplies capable of introducing enough raw materials into the market to support their consumption, factories do not have any recourse. They can only scale down the amount of product they can put out onto the market. Companies that make trucks cannot get their hands on chips, or the cost of purchasing them is not precisely profitable in the long term, making them fall into a dilemma. This is similar to the diesel fuel cost spike we have experienced, albeit caused by different underlying problems.
Already low inventory
When it rains, it pours. This is pretty well illustrated by the second reason behind the severe chip shortage: the fact that inventory was already running low. Before the pandemic completely ruined logistics throughout the world by forcing people to stay in their homes, it also severely damaged production chains, which naturally meant that companies making chips did not have an opportunity to fill up their inventory. Naturally, this meant that stores could not do so either. This means that the current shortages hit the market when it already lacked sufficient product volumes to function normally.
The final reason why the chip shortage continues to curtail truck production is the pure volume of demand we are seeing. As the experts from Worldwide Moving Systems point out, everyone is scrambling to grow their fleets, overcome the various crises brought about by the pandemic, and overtake their competitors. This has naturally led to a much greater strain on the companies producing trucks. And with the previous two points taken into account, it is no wonder that their efforts are flagging. They are facing extreme interest in their products without the ability to make enough of them. Instead of taking the opportunity to scale up their production, they can watch as the situation unfolds, which naturally means losing out on a lot of money. This, considering all the damage done by the pandemic, is not exactly a good thing for the smaller companies.
Solution on the horizon
All of this leaves us with one burning question: When will this shortage be over? Unfortunately, there is no definitive answer to be had. The most basic reason for all this is resource scarcity due to lacking logistics. So it’s only logical to assume that things won’t improve until a healthy logistics network can once more be established. And yet, this is a pretty tall order considering that everyone’s reeling from the fear of the pandemic, especially that it would once again worsen and force people into their homes.
Additionally, complicating the matter is that the original worldwide logistics network relied on various countries and major businesses. All of which have taken severe hits along the way. Right now, all trucking companies can do is focus on alternative solutions, such as increasing truck parking capacity.
The complications brought on by the situation
Perhaps the saddest result is that the lack of trucks is directly negatively impacting the time it will take to sort things out. As already stated, the only fix to the problem is re-establishing robust logistics networks. However, to do this, you would need vehicles for transport and, as one of the currently safest and most effective means of moving goods is truck fleets, we face an interesting conundrum. Without more trucks, we cannot solve the problem of fixing logistics. Without logistics working as they should, it is impossible to get more trucks quickly, or at all if the stalemate continues!
You should now know a bit more about why the chip shortage continues to curtail truck production and the underlying reasons for how the whole mess started. However, one fact gives everybody involved hope: the world is gradually overcoming Covid. With fewer and fewer dangerous outbreaks occurring due to vaccines and efforts of various countries worldwide, we can expect life to go back to a relative ‘normal’ sooner rather than much later, which only leaves us with the gritty task of making it through the present….a task made tricky by the fact that prices of everything have soared due to the difficulty of transporting goods—something caused by a lack of trucks.
Zack Taylor is an employee of a trucking company working as middle management. He has seen firsthand the effects the pandemic has had on the industry and continues to write about the various ways truckers are still struggling.