As we noted in our July 2021 industry update, semiconductor chip shortages and other supply chain challenges have caused sporadic shutdowns of many manufacturing facilities over the last two years. The transportation, automotive, and technology industries have been bearing the most severe impact of these disruptions, forcing companies to radically alter their production estimates and deliveries.
We were initially hopeful that these supply chain challenges would begin to ease during 2022 as the global economy recovered from the secondary effects of the COVID-19 pandemic. However, with dramatic developments related to Russia’s invasion of the Ukraine, it is becoming more and more likely that these disruptions will get worse before they get better.
For example, neon gases are one of the elements used to produce semiconductor chips, and Russia and Ukraine are critical sources of this product. According to Techcet, a California-based market research firm that specializes in critical supply chain materials and components, the United States’ neon supply comes almost entirely from this region, with Russia driving primary production, and specialized Ukrainian companies handling purification of the gases prior to delivery. For perspective, it’s important to note that the price of neon increased nearly 600% when Russia invaded Ukraine’s Crimean Peninsula back in 2014, a conflict which was smaller in scale and occurred over a shorter timeframe than that which is expected for the current conflict.
Additionally, palladium, the most valuable of the four major precious metals, is also used in the production of semiconductor chips and is a key component in catalytic converters. Russian supplies of palladium meet approximately 25-30% of the global demand for the metal, according to Reuters. The price of palladium climbed more than 7% in early March as part of the larger surge in precious metals, and although the automotive industry won’t feel that price increase for six months to a year due to long-term contracts, the financial pain of this increase will indeed be felt.
Master’s Transportation Can Help You Navigate These Challenges
We continue to encourage you to plan ahead as we navigate our new “normal”. Master’s Transportation understands the issues created by the supply chain shortages and we stand ready to help.
Just as we encourage you to plan ahead, we have done just that. With our strong manufacturer relationships, we’re well-positioned to continue offering a large inventory of new and used commercial vans and shuttle buses quickly and seamlessly – without complications. Whether you need increased luggage space, executive seating, or wheelchair lifts, we have a vehicle for you.
Our nationwide rental and leasing programs are something you cannot find anywhere else and may serve as the perfect solution to your short or long-term transportation needs. We provide flexible terms from one to 365 days a year allowing you to determine what option best fits your needs.
We welcome the opportunity to serve as your transportation partner, and are eager to help you continue moving people forward.