Media outlets focused on financial issues continue to talk about semiconductors and how they impact the economy. Truck drivers understand anything that affects goods and materials ripples through the freight hauling industry. It appears the persistent semiconductor supply shortage may be causing measurable repercussions.
According to data reported by the American Trucking Associations (ATA), for-hire truck tonnage declined in both June and July by 1.2 percent and 2 percent, respectively. This seems counterintuitive given the supply chain log jam that has many truckers still using hours of service exemptions. Trucking industry leaders and financial sector experts indicate the growing semiconductor shortage appears to be negatively influencing wide-reaching industries.
“Softness in tonnage over the last few months is due more to supply constraints, rather than a big drop in freight volumes,” ATA chief economist Bob Costello reportedly said. “Not only are there broader supply chain issues, like semiconductors, holding tonnage back, but there are also industry-specific difficulties, including the driver shortage and lack of equipment.”
An issue that may be of greater concern is the fact July for-hire tonnage was 2.9 percent lower than 2020, when the height of the pandemic caused widespread supply chain disruption. Semiconductors, coupled with other factors, are driving the economy in the wrong direction.
The U.S. no longer produces enough semiconductors to remain self-sufficient, and reliance on Southeast Asian plants leaves American industries increasingly vulnerable. For example, according to a recent Wall Street Journal report, automobile manufacturers such as Toyota, Ford, General Motors, and Nissan announced major production rollbacks because they cannot secure semiconductor chips.
Ford reportedly suffered a one-week work stoppage at its F-150 plant near Kansas City. Toyota reduced global production by 40 percent, and GM anticipates making approximately 100,000 fewer North American automobiles during the second half of 2021. Although many industries were already struggling to purchase semiconductors, recent outbreaks of Covid in regions such as Malaysia have exacerbated the problem.
“It’s a bit like a game of whack-a-mole,” Ravi Vijayaraghavan, of the Singapore-based consulting firm Bain & Co. that specializing in semiconductors. “We think we have supply sorted out, and then a problem suddenly pops up somewhere else.”
The shortage is now playing games with American truckers who won’t be hauling as many electronic devices and automobiles that rely on foreign-made semiconductors for assembly. Media outlets with a laser focus on financial implications are talking about stock prices. But the key to securing U.S. supply chains, and for-hire freight tonnage, trail back to reviving Made in USA semiconductor chips.