What’s Causing the Delay in New Car Deliveries? It’s a Railway Shortage, Not Semiconductor Delays
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What’s Causing the Delay in New Car Deliveries? It’s a Railway Shortage, Not Semiconductor Delays

What’s Causing the Delay in New Car Deliveries? It’s a Railway Shortage, Not Semiconductor Delays

The auto industry is facing a new obstacle as a scarcity of railroad cars is resulting in delays in delivering new vehicles. Due to this shortage, approximately 70,000 new vehicles are stranded across the country, unable to reach dealerships. Concerned about this issue, the Alliance for Automotive Innovation, the auto industry’s lobbying group, has requested the intervention of the US Surface Transportation Board.

This scarcity of rail cars is particularly troubling because freight rail typically transports nearly 75 percent of new vehicles and handles 1.8 million carloads of auto parts annually. The backlog of finished vehicles is disrupting the automotive supply chain, which is still recovering from the shortage of semiconductor chips. The delays in delivering vehicles are significantly impacting suppliers, employees, and the overall US economy.

The problem revolves around the shortage of autoracks, specialized rail cars that carry vehicles. Rail transport is preferred over carrier trucks due to lower costs and faster delivery times. An autorack rail car can transport 12 to 18 vehicles, compared to a truck hauler that can only carry a maximum of seven to eight vehicles.

The scarcity of rail cars is a complex issue due to the extensive rail network in North America and the complexities of rail shipping. Rail shipping involves multiple destinations and routes, making it a challenging puzzle to coordinate. Autoracks are part of a shared pool administered by a company called TTX. Manufacturing new autoracks takes two to three years, making it a non-quick fix.

The problem originates from a combination of factors. One notable factor is that the rebound in new-vehicle production after the semiconductor chip shortage has exceeded most railroads’ forecasts. Additional issues have arisen due to changes in supply chain patterns, such as redirecting vehicles through west coast ports instead of the east coast, resulting in longer rail car journeys than anticipated.

Meanwhile, several automakers are still dealing with the aftermath of the microchip shortage. Volkswagen stated earlier this year that the chip scarcity will continue to affect car sales in 2023. Automakers like Cadillac, Ford, and Genesis have also mentioned that the shortage has forced them to limit or exclude popular features on certain vehicles.