TAKEAWAYS
Automotive supply chains in North America today face a complex landscape due to economic volatility, electrification initiatives, and regulatory pressures. As a result, risk is a constant challenge—and mitigating that risk is always top of mind. A new report from Moody’s, Navigating Disruption in Automotive Supply Chains , breaks down these six key risks that automotive suppliers must battle in 2026: 1. FINANCIAL VULNERABILITY AND DEMAND FLUCTUATIONS Suppliers are highly exposed to sudden production shifts, raw material price swings, tariffs, and rising interest rates, putting smaller firms at greater risk of insolvency. Early warning signs often include quality lapses, delivery delays, and unexpected freight cost increases. 2. ELECTRIFICATION CHALLENGES FOR EV PART SUPPLIERS EV suppliers face heightened risk due to dependence on critical minerals, battery capacity, and specialized semiconductors—much of it still sourced from Asia. With fewer but more complex components, any disruption can have outsized effects across the EV supply chain. 3. AFTERMARKET RELIANCE AND SERVICE PART RISKS With the average vehicle age reaching 12.8 years, aftermarket parts now drive most service demand. Disruptions among lower-tier suppliers threaten vehicle uptime and increase inventory complexity and capital tied up in parts networks. 4. SAFETY, REGULATORY, AND RECALL RISKS Safety recalls remain costly and prolonged, as seen in past crises that took years to resolve. When financially distressed suppliers are involved, OEMs often shoulder liability, regulatory scrutiny, and reputational damage. 5. OPERATIONAL CHALLENGES: COMBUSTION VS. EV SUPPLY CHAINS While EVs have far fewer mechanical parts than internal combustion engine vehicles, they rely heavily on electronics, software, and specialized materials. This shifts risk toward battery diagnostics, high-voltage safety, and software support, increasing training and aftermarket demands. 6. CYBER RISK Highly interconnected automotive supply chains present expanding entry points for cyberattacks, with most industry leaders viewing supplier networks as vulnerable. As digital and AI-driven systems multiply threat vectors, stronger supplier vetting, cybersecurity standards, and workforce training are increasingly critical. 6 KEY RISKS FOR AUTO SUPPLIERS
LOW DEMAND, LEANER TEAMS
As the freight industry moved into the final months of 2025, logistics operators began to recognize a shift in seasonal dynamics. Demand that has traditionally surged late in the year proved more muted and uneven, signaling a recalibration rather than a collapse. About 17% of logistics professionals reported freight volumes in October and November that fell short of historical peak-season expectations, according to a late-2025 Tech.co survey. The experience prompted companies to reassess cost structures, labor models, and capacity planning assumptions heading into 2026. The slowdown dovetailed with other external cost pressures—including rising diesel prices— squeezing margins and exacerbating financial strain across logistics operations. Rather than leaning on previous cost-relief measures such as financing or debt restructuring, many firms instead embraced workforce reductions as a more immediate means of adjusting to the shifting market, the survey shows. Here is how this challenge is playing out: Pressure on priorities: The percentage of logistics professionals prioritizing financial pressure management increased, reflecting broader economic stress within the sector. Cost-cutting via staffing: Since September 2025, the share of companies reducing employee headcount rose by roughly 15%, while those cutting employee hours increased about 13%. Shift in strategy: Workforce reductions are replacing previously more common responses like financing and debt restructuring, which have declined as cost-management tactics. The logistics sector has spent much of the past several years adapting to volatility and chronic labor shortages, so a downturn in freight demand signals a turning point. Companies that can recalibrate quickly—balancing capacity, cost, and workforce flexibility—may be better positioned to weather what some analysts have called a prolonged freight market softening, according to the Tech.co research.
Reducing employee hours Workforce Reductions Tick Up Reducing overall employee headcount
28%
26%
19%
13%
13% 13%
SEPT 2025
OCT 2025
NOV 2025
Source: Tech.co
January 2026 • Inbound Logistics 33
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