In Europe, automotive production is currently disrupted. This is linked to Europe’s dependence on Asian semiconductors (Malaysia & Taiwan) – essential materials in chip and built-in circuit production. A worldwide semiconductor shortage is affecting the automotive industry: 2021 production already registers a shortfall of 7.2 million light vehicles to date. Moreover, specialists reckon that the crisis will last until 2023.
Why is Malaysia at the center of the crisis?
Asia produces more than 75% of semiconductors available worldwide. Malaysia, although less important than Taiwan, is a key hub for chip manufacturing in the automotive industry. European groups such as Infineon Technologies (Germany), NXP Semiconductors (Netherlands) and STMicroelectronics (France / Italy), which supply the main manufacturers, decided to establish test and conditioning centers in Malaysia. For instance, Infineon employs 8,000 people in its Malaysian plant which was forced to close for three weeks due to Covid-19 cases.
Is the health crisis the only cause of the shortage?
The drastic containment measures in Malaysia have clearly impacted manufacturers’ ability to source chips. Rising Covid-19 infections and the obligation to close plants in case of clusters have meant that supply has fallen in the country, even while global demand keeps increasing. As consumers build up stocks in response to previous shortages, they also reduce product availability. This is compounded by increased transit times since the economic upturn, as more ships than ever pass through the Suez Canal. Estimated delivery times currently stand at around 21 weeks.
How can Air Time Critical® achieve better transit times between Malaysia and Europe?
On Board Courier solutions (OBC) are not currently available due to Covid
Air Time Critical® would usually recommend On Board Courier (OBC), whereby a courier boards the first flight available with the shipment in their luggage. This is a particularly effective option as the courier boards a flight within hours of our client’s request, thereby significantly reducing delivery times. Unfortunately, Covid-19 restrictions such as blockade or quarantine make this nigh on impossible to organise. Although Singapore still allows On Board Courier, it is not feasible in the rest of Asia (including Malaysia).
Alternative solution: Priority Air Freight with tracking
In the current context, Priority Air Freight with tracking is an excellent alternative to On Board Courier. This is an airfreight option with a higher priority level than a classic airfreight solution. This means shipments benefit from a priority level almost as high as passenger luggage (which always have higher priority than freight).
This “premium express solution” offers average delivery times of 2 to 3 days from Malaysia to Europe (vs 5 to 7 days with classic airfreight solutions).
Shipment priority level is not the only factor contributing to reduced delivery times. The forwarder’s service level also ensures a quick and reliable delivery.
Air Time Critical® offers premium services to cut delivery times:
- Coordination with the Malaysian supplier to promptly agree removal details
- Selection of flights and airlines: daily or regular direct flights
- No shipment consolidation – a time-consuming operation that consists in grouping shipments from different senders. This common practice among large express freight operators extends the time frame by several days
- Anticipation of procedures at the arrival airport
- Exclusive services: night and weekend callouts; express customs clearance and advance payment of duties; weekend customs; priority cargo handling for quicker retrieval of parcels or pallets on arrival
- Delivery by dedicated express freight cab.
Emergency from Malaysia? Contact us!
Note: this information is liable to change without notice (correct as of 18 November 2021). For up-to-date information on the situation in Malaysia or on the semiconductor crisis, please contact us and read our articles on these subjects: