Semiconductor Shortage to Hinder Rail Auto Traffic

Railroads are expected to soon be feeling the effects of a global shortage of semiconductors.

Several auto assembly plants in North America have slowed production due to the semiconductor shortage, which is being linked to the COVID-19 pandemic.

 “It will definitely have an impact,” said industry analyst Todd Tranausky, vice president of rail and intermodal at FTR Transportation Intelligence, a freight forecasting firm, in an interview with Trains magazine.

“There was already starting to be a little bit of a decline before the holidays and this will only make it more pronounced into January. The question will be how long does the disruption last.”

The demand for semiconductors has risen due to rising consumer purchases of electronic devices.

Tranausky said the shortage appears to be a several-week phenomenon. The upshot of it for railroads is that automotive traffic in the first quarter of 2021 is expected to be below projections.

As it is a six-week shutdown of automotive plants last spring during the early stages of the pandemic led to railroads losing up to 90 percent of their automotive business.

Although overall automotive sales for 2020 were down, some automakers reported sales gains in the fourth quarter.

Auto sales this year are projected to be around 16 million vehicles, a 10 percent increase over 2020, said research firm IHS Markit.

Another factor that is expected to hinder rail automotive traffic is a trend among auto dealers to hold less inventory of new vehicles, Tranausky said. 

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