Shipping Costs Affecting Car Production

Sep 27, 2022 2 min read
Shipping Costs Affecting Car Production

Just when we were hoping prices would come down….

If you think shortages for the auto industry are starting to ease, you might want to reconsider that conclusion. Not only is the chip shortage ongoing, a report recently published by The Detroit News highlights a growing problem: not enough ships. Large ocean freighters are constantly being used to transport goods, thanks to constraints, with rates soaring to around $80,000 a day to secure one, which is apparently about 5 times what it used to be. In turn, that means fewer cars, heavy machinery, and other items vital to keep vehicle production rolling forward.

Check out a ship carrying luxury cars which ran aground here.

This isn’t great news for anyone who was hoping for relief in new vehicle prices. While it’s still too early to tell, we’re hopeful this won’t slow the decline in used car prices. After all, with inflation hitting people from every direction, some relief when it comes to buying a vehicle would be most welcome.

From the sound of the report, this will mostly affect the transport of new cars. While that might make you breathe a sigh of relief if you’re looking to buy something made in North America, the consequences could still impact you and the economy in general. After all, this continent has become quite the car production center in the last decade or so, with plenty of vehicles loaded up onto ships and sent to other countries around the world. If that slows down, automakers might be forced to cut back workers’ hours or even lay off some people. Also, with fewer new cars on the market, prices in general could increase or at least no go back down to pre-2020 levels.

On these ships, about 6,500 cars can be transported at once. Over a 60-day trip, the cost to transport each vehicle is about $740. Back in the day, that cost would be about $148. And guess who gets to ultimately bear the burden of that cost. That’s right, you, the consumer.

Source: The Detroit News

Image via Pexels

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