Ford, VW face more work stoppages due to chip shortage

Knight-Swift announced a mid-teen percentage increase in over-the-road contract rates as “over-the-road truckload demand is at unprecedented levels and expected to continue into 2022,” the company said in its first-quarter earnings report April 21.

“One large carrier in our network who currently hauls volume out of the Bajio [Mexico] region came back to us today to ask for a rate increase to cover deadhead to replace the southbound OEM volume they had that enabled them to load northbound for us,” Silver said. “This same impact is being felt throughout all of Mexico right now as the chip shortage has started to take its toll on the market.”

Farley said the chip shortage was exacerbated by a fire at Japan’s Renesas Electronics Corp., a major global semiconductor supplier.

Ford officials did not specify which factories could face work suspensions during the second half of 2021. According to a Reuters report, Ford will pause output at its plant in Hermosillo, Mexico, May 3-17 due to the chip supply shortages.

Officials at Ford and General Motors declined to comment to FreightWaves about any production suspension plans related to the chip shortage.

Daniel Flores, a GM spokesman, said the company will likely “have more to say about the chip shortage next week [May 5] during earnings.”

In March and April, GM announced downtime on production shifts at several plants across the U.S. and Mexico.

Volkswagen also recently announced it will suspend production of the Jetta and Tiguan models in May at its assembly plant in Puebla, Mexico, due to the ongoing global shortage.

The production halt will last May 6-16 for the Tiguan and May 3-19 for the Jetta, the company said in a statement.

“The chip supply will continue to be complex in the coming months,” Volkswagen said.

Silver said demand for Mexico freight is only going to continue to increase as the U.S. recovers from the pandemic, and people start consuming more goods that are produced south of the border.

“Couple the chip shortage (lack of southbound into Mexico) with the increased demand, and new demand from companies who are nearshoring, and you have this rate increase that’s going to likely be at least 15%, if not higher, heading into the produce season. We’re informing our affected customers of these rate increases actively as we measure the cost impact throughout our network,” Silver said.

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