A broken supply chain has SEPTA waiting for microchips, paint — and train cars

The same kinks in the global supply chain that have emptied store shelves and fueled inflation are squeezing Philadelphia’s public transit authority.

SEPTA is paying more and waiting longer for a wide range of materials it needs to maintain its equipment and structures: computer microchips, copper for the catenary wires that power trains, even paint.

And 45 double-deck passenger cars for Regional Rail, ordered in 2017, are stuck in China.

On average, costs are up about 25% for materials, and more for microchips and similar components, say SEPTA officials who manage maintenance and construction. Blunting the impact somewhat: The agency habitually squirrels away some needed goods for emergencies, and employees have become adept at salvaging useful parts from junk.

Vendors “can only guarantee prices for a short window because of the volatility of what they pay for the raw materials,” said Andy Abdallah, SEPTA’s assistant general manger for procurement and supply chain. “We run a transit agency, but our needs are not any different from any other [builder] … steel, lumber, and so on. We’re in the same boat as everyone else.”

No maintenance work related to passenger safety has been deferred, said Scott Sauer, assistant general manager for operations at SEPTA. And “at least for now, customers are not seeing any impact” from supply-chain woes, he said.

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Although shortages for consumer goods and problems for industries, such as automakers, have received much coverage in the media, the impact on public transit has been less discussed.

In the face of increased costs for materials, SEPTA has taken other steps, including using in-house labor whenever possible and “stretching out timelines” for completion of projects, said Kate O’Connor, chief engineer for bridges and buildings.

For instance, she said, a project to rebuild stairs at the 69th Street Transportation Center was delayed for a couple of months while SEPTA waited for protective sealant to arrive.

And the sandblasting and repainting of structural steel on a parking ramp was delayed a month for a shipment of paint.

“At the end of the line, we know we’re going to be able to do less” as price increases and longer project times squeeze the agency’s budget, O’Connor said.

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The lead time for ordering circuit boards for signal systems has increased from up to nine months to up to 18 months depending on where a supplier is sourcing its microchips, said David T. Montvydas, chief engineer for the maintenance of way division that oversees tracks and overhead wires.

SEPTA placed the $810,000 order for those circuit boards, with expected delivery in early 2023, in plenty of time. Cost of components with the chips has risen about 20%, and “we’re looking for it to go higher,” Montvydas said. Microchips also are used in station elevators and escalators as well as in trains, buses, and trolleys.

“For a long time before supply-chain problems and COVID, we’ve operated under budget constraints, even on shoestring budgets,” he said.

Montvydas’ department has enough rolls of copper and other supplies to replace up to one mile of overhead wire at once, for example. Among metals, copper prices have been especially volatile; O’Connor said it costs about 30% more than it did and takes 1½ times longer to ship.

Almost five years ago, SEPTA awarded a $138 million contract to CRRC MA, the U.S. subsidiary of China Railway Rolling Stock Corp., one of the largest train makers in the world. The state-backed enterprise has been gaining a foothold in the American train market — it is building 404 cars for metro Boston’s T subway system, for example — and underbid its closest competitor for the Regional Rail job by $34 million.

When the pandemic began in 2020, shipping backlogs and the difficulties staffing a CRRC factory in China delayed the delivery date, in part because of the Chinese government’s “zero COVID” strategy of aggressive lockdowns to stop outbreaks.

The shells of the railcars are made at a facility in Changchung, a provincial capital in northeastern China. When ready, they will be shipped from the Yellow Sea port of Dalian to the ports of Newark or New York. Trucks carry the shells to the CRRC MA factory in Springfield, Mass., for assembly.

Part of the delay is due to changes SEPTA requested in 2019 to the welds of the train carriages, but they were scheduled to roll out in 2020, a year later than planned.

SEPTA is sensitive to welding. In 2016, the agency had to take 120 Silverliner V Regional Rail cars out of service for stress fractures in an equalizer bar caused by a flawed weld, and the issue arose again the next year with cracks found on Market-Frankford Line subway cars. Both were made by different companies.

Now, SEPTA says it expects two prototypes of the CRRC passenger coaches to arrive in the region for testing in July. Cars could keep coming through the fall of 2023 — if there are no more delays.

The 45 new cars are designed to replace some of the Silverliner IV cars still in use on Regional Rail, some of which date back to the administration of President Jimmy Carter in the late 1970s.

With two levels of seating, each CRRC car will be capable of carrying 133 passengers, compared with the 100-rider capacity of current cars. SEPTA plans to roll them out on some of the longer and popular regional commuter lines such as Paoli-Thorndale, Doylestown-Lansdale, and Wilmington, spokesperson Andrew Busch said.

» READ MORE: Deal on new rail cars embroils SEPTA in U.S. suspicions of China manufacturer

Of course, the order was made well before the pandemic pushed many Regional Rail commuters to work from their homes instead of in Center City. SEPTA is working on a plan it says will increase the frequency of trains and integrate Regional Rail with its transit network in the city as a way of increasing ridership.

The agency is committed to carrying out the purchase and believes the multilevel passenger cars will “be a service enhancement for our riders,” Busch said.