Scarcity explains the basic economic problem that the world has limited—or scarce—resources to meet seemingly unlimited wants, and this reality forces people to make decisions about how to allocate resources in the most efficient way.

Economics is like the weather – hard to accurately forecast. To complicate matters, throw in a prolonged pandemic and who would have predicted record stock markets highs, a soaring housing market and 35% of employees working from home? After 18 months of chaos, everyone globally is now experiencing rising inflation and empty shelves, but why?

In this article I’m going to explain:

1) Economics 101 - The main causes and reasons why we are experiencing shortages which in turn are leading to prices increases.

2) Tank Car Valves Supply Issues & Solutions

ECONOMICS 101

According to the US Bureau of Economics, US consumer spending (which accounts for more than two-thirds of US economic activity) rose 5.5% between Jan 2019 and July 2021. In other words, after all the Covid-19 layoffs and shutdowns, US consumer demand has rebounded to record highs. Manufacturers are struggling, not only because of rising consumer demand, but because of a scarcity of raw materials, freight, labor shortages and transportation.

RAW MATERIALS - After years of working to be as lean as possible, manufacturers were caught off guard by consumers in wealthy countries. Using the pandemic lockdown to order everything and anything, overburdening the shipping industry with cargo and exhausting the supplies of many components. Instead of catching up to demand, the prolonged shortage of some materials made it impossible to make others.

FREIGHT – International freight started slowing with the introduction of tariffs. The week-long blockage in the Suez Canal and a number of Covid-19 port closures in China have added to the delays. Overall, it has been a painful lesson in how interconnected we all are. Even if a ship arrives on time, a quarantined US dock worker, delays that container from getting to the Midwest, that delays payment to the supplier (somewhere in Asia) who now can’t make pay-roll, has to lay off employees and further cuts output.

LABOR SHORTAGES – According to the US Labor Dept there are over 10 million available jobs, yet employees are continuing to quit their jobs (Great Resignation) and the unemployed are not returning. In part, this is a demographics issue. Older workers took the lockdowns as an opportunity to retire early. Many were offered early termination packages, while also taking advantage of record high 401k balances. For others, the idea of returning to the office and a daily commute was too much to stomach. Other factors include lower immigration rates and decades of lower birthrates have impeded the numbers of new workers entering the labor force.

TRANSPORTATION – Trucking has been a persistent problem in the US since the early 2000s. The shortage of drivers in 2019 was an estimated 60,000, it is currently at 80,000 and expected to rise to over 100,000 by 2023. Demographically, truckers are 80% men and the average age is 47. The number of new drivers gaining the CDL’s is declining and is generally not considered as a desirable job option for younger generations. Even if sufficient drivers could be found, there simply aren’t enough actual vehicles to meet current, never mind future demand.

TANK VALVE SHORTAGES

Unfortunately, the Tank Car industry has not been immune to the global supply crunch… In many respects, it is an isolated, yet self-sufficient industry. However, being introspective has some disadvantages. We are notoriously slow to adopt change and many of our service components have seen virtually no innovation in decades. This shouldn’t come as a surprise…

KNOWING YOUR MANUFACTURER – When did you last visit your valve manufacturer (if ever)? You might be surprised to learn that most of our manufacturers aren’t strictly manufacturers, but machine and assembly facilities. Their products are designed in the US, components are then sourced from Asia and lastly machined and assembled back in the US. A plant visit will highlight how much or little (if any) inventory they keep, how extensive or limited their testing abilities are. During normal times, it can take 4-6 months to source a tank car valves, these lead times are now 6-8 months.

Many of our manufacturers only supply the tank car market, rendering their influence on scheduling production runs. To compound matters, we’ve also seen a large number of highly-skilled labor leaving our industry for higher paying low-skilled jobs. But it’s not all doom and gloom. If you are seeing long lead times, there are options to consider…

THE ALTERNATIVE - Fortunately, we also have a number of globally recognized manufacturers that do produce their own components and supply many industries, not just the tank car market. It is this ownership of the manufacturing processes and global scale that provides them with supply-chain advantages…

These manufacturers have greater influence in sourcing raw materials, productions schedules, freight/ transportation availability. Similarly, their multi-industrial exposure means they are less effected by tank car market fluctuations and have historically done a better job at keeping key personnel. In addition, these ‘certified’ manufacturers have stepped up their commitment to our industry by using their capabilities to produce secondary components such as saddles, flanges and plugs.

SUCCESSFUL PARTNERSHIPS – Choosing a valve manufacturer shouldn’t just be about historical familiarity or price. Do they offer engineering support, field service? More importantly, when you desperately need a valve, does your valve manufacturer keep inventory (probably not).

TransQuip USA Inc, is the Tank Car Industries solely dedicated stocking distributor. They are the exclusive suppliers or Jamesbury, Rego, Fort Vale products. TransQuip maintains over $20 million of tank component inventory. TransQuip offers engineering support, field services and training. TransQuip partners with all our industries regulatory and trade associations to continually develop innovative, safer and more efficient products.

TransQuip’s manufacturers offer industry leading warranties and have consistently proven themselves as the most robust and best performing valves available. TransQuip’s customers rely on TransQuip as an invisible resource, where to go when things elsewhere go wrong.

If you are experiencing long lead times for Tank Car components. Contact TransQuip!

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Supply Issues with Tank Car Valves…