Psaki said that the White House is meeting with Homeland Security Advisor Elizabeth Sherwood-Randall and is working closely with automakers “to discuss alternative processing.”
The five auto manufacturers in Ontario, Canada — Toyota and Honda being the largest, as well as Ford, General Motors and Stellantis — are “all dependent on just-in-time delivery of parts and components,” said David Adams, president of the Global Automakers of Canada. “But some are more exposed than others to the current blockade at the Ambassador [Bridge], depending on where their core suppliers are located.”
“Typically a plant can deal with short-term disruptions, but when you get into something lasting a couple of days or more, you start to see production line shutdowns — which is where we are at now,” Adams said.
With that bridge closed, truck drivers have been directed to the Blue Water Bridge, which connects Sarnia, Ont., with Port Huron, Mich. — resulting in delay times there are now four and a half hours long. Some have just turned around and gone home to wait for the road-blocking Canadian protesters objecting to their country’s Covid policies to disperse.
Inflation data from January showed a year-over-year inflation total of 7.5 percent, higher than Wall Street predictions. After remaining relatively stable for the last decade, the consumer price index for used cars and auto parts spiked more than 10 percent in 2021, according to the U.S. Bureau of Labor Statistics.
A new supply chain headache: Though corporate trucking industry interests in Canada have disavowed the protests, saying they’re now driven more by a disgruntled general populace, the extra congestion has amplified a supply chain already under pressure.
Anne Reinke, president and CEO of the Transportation Intermediaries Association, a coalition of third-party logistics professionals, said that truck drivers and everyone in the business of freight movement were facing “an already-deficient supply of truck drivers in America, and a Class 8 truck shortage, and the labor shortage, and the equipment shortage, and the raw materials shortage and all of that — this is just icing on the cake.”
Reinke said where it used to take a day or two for shippers to find a driver to cover a load, it now takes four to 10 days. “And so what our members have seen is basically backlogs and high prices,” she said.
The auto industry, situated at ground zero for the protests, has been struggling with supply chain disruptions since the start of the pandemic.
Chris Gardner, the senior vice president of operations for the Automotive Aftermarket Suppliers Association, said many aftermarket auto parts suppliers have resorted to air shipments during the recent supply chain challenges, which inoculates them somewhat from challenges that come from bridge closures. But he said shipping by air is more expensive, and if trucking becomes less reliable and more expensive it will likely lead to higher air shipping prices for everyone.
“There are definitely aftermarket parts that come from Canada into the U.S., but there are a lot more parts that come from Mexico,” Gardner said. “If this type of thing happened on the southern border, we would be in trouble.”
Cross-border trucking on the northern border is dominated by Canadian truckers, according to the Owner-Operator Independent Drivers Association. Teamsters Canada, which represents 55,000 Canadian truckers, said the ongoing protest “has served to delegitimize the real concerns of truck drivers today.”
“We firmly believe in the right to protest government policies and voice a wide array of opinions, but what is happening in Ottawa has done more harm to Teamsters members, be they truck drivers who were trying to deliver their loads, or hotel, restaurant and healthcare workers who were intimidated, abused or prevented from accessing their workplaces, by several protesters,” Teamsters Canada President François Laporte said in a statement.
Trade impacts: A short-term slowdown of auto parts traveling across the U.S.-Canada border could have more negative effects for Canada than the United States. Nearly two-thirds of Canadian automotive imports are from the United States, according to the USTR, with the U.S. exporting $29 billion in auto parts to Canada in 2019. The U.S. imported $16.9 billion in auto parts from Canada in 2019.
Gardner said he agrees that Canada’s import market is more vulnerable to challenges presented by the bridge closure than the U.S., which has led Canada’s Automotive Parts Manufacturers’ Association to go on a media blitz begging for a swift end to the protests.
“Blocking the Ambassador Bridge could CREATE a daily SHORTAGE of about $300M goods & RAISE prices on both sides of the [U.S.-Canada] border,” tweeted APMA President Flavio Volpe. “Brain dead move. Thank you to WORKERS for your PATIENCE & understanding if you get temporarily laid off while we wait for PROTESTERS to grow up.”
Meanwhile, the price of auto parts is at an all-time high. Automotive costs were a key driver of inflation in 2021, and the price of new and used vehicles spiked in the last year.
Thursday’s inflation numbers showed used car prices up more than 40 percent over the last year, with the Bureau of Labor Statistics calling the used car price spike a “major contributor” to inflation. The price of new cars was up just over 12 percent over the last year.