The worst of delays in the automotive supply chain is likely behind us but issues will linger past this year, predicted the Specialty Equipment Market Association.
The latest prognostication came in its Future Trends Report, released this month. It reported that more than 80% of industry companies have been severely or moderately impacted by supply chain disruption. Issues are expected to stay the same or improve in the short term, but not get worse.
“Most issues, including transportation delays and supply shortages, should improve through the year and return to more normal levels by the end of 2022,” the report said.
However, it added, lingering issues like elevated prices will continue into 2023.
“All signs suggest that the worst of the supply chain disruption has already passed, and things should be in a better place by the end of 2022. Some things, including price, may take longer and bleed into 2023,” it said.
The report noted that many supply issues centred around shipping, which included port delays. As those ease in the second half of this year, issues will be relieved. But the elevated costs, which are related to freight transport and commodities, will take longer to ease.
Consumers, however, are still spending money. Two-thirds reported that they’ve experienced supply chain constraints in some way. But just because a specific item can’t be found doesn’t mean they’re just putting their money back in their wallet, observed Kyle Cheng, SEMA market research manager.
“When they go to your store and can’t find a product, they’re switching brands or they’re switching retailers. So as a company, if you’re not able to meet demand, you’re losing business. It’s not that they’re not stopping buying it, they’re just looking for other methods to buy it,” he said during the SEMA webinar Outlook for 2022: Industry Forecast, Supply Chain Projections and Changing Consumer Demographics.
“So demand still there. And despite all these supply chain issues, they’re looking for other ways to purchase it.”
Notably, the specialty-equipment industry has faced different challenges around supply chain disruption, SEMA’s report noted.
“Manufacturers and distributors face a wide variety of shipping and production delays, both foreign and domestic, while retailers face more domestic supplier issues,” it said.
“On the bright side, most projections have this kind of delay improving by the end of the year. So by the latter half of 2022, we should be in a better place in terms of getting through these ships.”
Cheng noted that there are about 110 ships waiting off ports in Los Angeles and Long Beach, California.
“So, right now, we’re seeing record numbers of ships waiting,” he said. “On the bright side, most projections have this kind of delay improving by the end of the year. So by the latter half of 2022, we should be in a better place in terms of getting through these ships. Demand should be in a better place and we should have more logistical capacity to handle it.”
Sourcing from different suppliers to get around challenges is easier said than done in most cases.
“Many businesses looking to source domestically have had difficulty finding vendors — particularly ones that can match prices from Asia,” the report said. “Another factor driving companies to find other suppliers: Tariffs. Existing tariffs set in place prior to the pandemic continue to impact international shipping, compounding already high prices for inputs and products.”
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