A worker inspects a new car in an assembly plant of Dongfeng Honda, in Wuhan, China, on Sept. 3, 2020.The blockage in the Suez Canal is straining an already struggling automotive industry, and further delays could create shortages in the U.S. market, if the massive Ever Given container ship cannot soon be refloated.
The auto industry depends heavily upon the canal, which facilitates the move of raw materials, parts and finished vehicles. As of Friday morning, Europe’s Car Dealer magazine reported at least two large auto transport vessels, the Morning Star and the Hoegh London, were blocked by the grounding of the Ever Given. It said several other vessels are heading towards the Suez and could either be forced to anchor if the crisis isn’t resolved, or to divert.
The auto industry is particularly vulnerable right now. Factories around the world closed for months last year due to the coronavirus pandemic and retail inventories are at low levels not seen in decades. In the U.S., for example, J.D. Power estimates there are about 1 million fewer vehicles on dealer lots than is normal this time of year.
Even a slight disruption in the supply chain can compound such problems in an industry that operates on a just-in-time basis, with factories maintaining as little inventory as possible,