Indus Motor Company (IMC) has announced to stop production at its plant for 3 days due to non-availability of parts, while assemblers and vendors are opting for costly air shipments of parts and accessories due to huge delays caused by congestion at ports all over Asia. CEO of IMC Ali Asghar Jamali while talking to Dawn said:
“We have decided to close down production on Friday, Monday and Tuesday and will try to cover up production loss by calling workers on overtime in future”.
He said the arrival of imported parts is facing delays of 2 weeks due to ongoing port congestion all over Asia, forcing assemblers and vendors to go for air lift of inputs to avert any disruption in production lines of vehicles. The CEO went on to say that appreciating rupee value against the dollar may offset hike in air shipment charges.
Accoring to CEO of Loads Ltd Munir K. Bana components from Japan and Thailand have been airlifted for the manufacturing of exhaust systems for two leading Japanese car assemblers in the last one month. Munir added that emergency airlifting of components had to be arranged to meet the sudden increase in demand from the assemblers as the shipments were stuck in transit and deliveries were also delayed due to backlog in various Asian countries.
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A Honda Atlas executive said that they are facing CKD parts shortage due to sudden increase in demand plus the planned parts arrival is also an issue due to port congestion, resulting in production delays in addition to air shipments at higher costs.
Chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Abdul Rehman Aizaz said the State Bank’s decision to cut interest rates to 7% from 13.25% in March has revived the auto industry, but these higher volumes have also brought new challenges. Procurement of raw materials and sub-components from international suppliers have become a difficult task from the last week of September, he said, adding that the sea freight cost from China has also swelled to $1,800-$2000 per 20ft container from $600-$700 in the last two months.
Due to worldwide disruptions in supply chain, raw materials like aluminum, copper, steel and plastics have registered a jump of 40-50% from July till to date, resulting in bludgeoning of input costs for auto parts manufacturers, he said.
Full Story: Dawn