Delay: Over 180,000 new vehicles waiting to be loaded by Rail in the US
MELISSA BURDEN THE DETROIT NEWS
The snow, ice and extreme chill may be gone, but automakers still are feeling the aftereffects of the harsh winter: For months, big delays in the nation’s rail network have forced them to park newly built cars and trucks in guarded lots or to hire truck carriers to get them to dealers.
The delays began several months ago and likely won’t be erased until the Fourth of July, according to one transportation analyst. As a result, some models are in short supply and dealers and customers are having trouble getting them as quickly as they’d like.
The sales hit is hurting profits for some carmakers, as they are unable to sell as many vehicles. And the rail issue has temporarily boosted transportation costs for some car companies — which typically heavily rely on rail — to move new vehicles.
“There is a sizable backlog of shippable vehicles,” Richard Kiley, who heads automotive business at Norfolk Southern Railroad in Norfolk, Va., and chairs the Multilevel Pooling Executive Committee, a rail industry group that helps manage the North America pool of auto carrier rail cars, said in an email.
Kiley said about 180,000 new vehicles are waiting to be loaded by rail across North America; the typical figure is about 69,000 and also is higher than last year’s 120,000 vehicles in March 2013.
Companies, including automakers, tend to run into rail-car delays in the spring, but this year’s colder and longer-than-normal winter caused havoc for automakers’ logistics departments. Kiley said cold weather tends to lead to railroads operating slower than normal, as the weather requires more inspections; people working outdoors aren’t as efficient as normal; and machinery tends to fail more often. This increased the time to move product and cut fleet capacity, Kiley said.
Trains had to lighten loads to safely carry the vehicles; that’s because trains’ air braking systems get more difficult in cold weather. The extreme weather shortened how far conductors and engineers could get the trains on a shift. That meant fewer rail cars were available to ship goods across all industries.
Toyota Motor Corp. said rail delays have made it difficult to get vehicles such as the popular RAV4 and Highlander to dealerships. For example, earlier this month Toyota had about 1,000 Lexus RX SUVs ready to be sent “that have been held up by the rail car shortage,” said Jeff Bracken, Lexus Group vice president and general manager, in a call with reporters this month.
In Flint, rows and rows of 2015 heavy-duty Chevrolet Silverados and GMC Sierra pickups are parked off-site in a guarded lot near the Flint Truck Assembly Plant until they can be shipped by rail. The bad winter also hurt deliveries of GM’s full-size SUVs introduced in the first quarter. The company in some cases opted to truck vehicles over the road instead of by rail.
GM spokesman Tom Henderson said in a statement, “This winter’s severe weather has severely strained the North American rail network. As a result, many industries including the auto sector, are coping with slowing throughput which is resulting in rising inventories of products at plant and rail yards across the U.S. and Canada.”
He said GM anticipates working through the backlog of vehicles by late May or early June.
Honda North America confirmed it has experienced shipping delays. “We are working with our rail partners to overcome these challenges and have expanded our car-hauling footprint around our plants and ports,” Marcos Frommer, manager of corporate affairs and communications at Honda North America, said in an email.
Ford Motor Co. said shipments of some vehicles, including the F-150 pickup and compact Focus, were delayed because of weather-related rail backups. Chief Financial Officer Bob Shanks said last month the backups weren’t likely to hurt the company in the long run.
“I think that will clean up and it won’t be an issue going forward,” he said.
An industry report from PHH Arval, a global fleet management firm, says rail-car shortages are typical in the spring, but they started earlier this year. The report dated March 10 noted a rail car shortage of 2,500 cars compared to 1,000 at the same time in 2013.
The report said shipments were slowed from Chrysler Group LLC’s Saltillo Truck Assembly Plant (Ram trucks) and the Chrysler Toluca Assembly Plant (Dodge Journey and Fiat 500). Chrysler said rail deliveries had some of the biggest delays in recent memory. It didn’t help that one of the company’s newest and most popular vehicles — the Jeep Cherokee — was already in short supply.
In addition to relying more on trucks, automakers have begun using different shipping yards to put vehicles on trains — first sending them on car haulers or shipping vehicles by sea from Mexico to the U.S.
Charles Clowdis, managing director of global trade and transportation for IHS, a global information company, said he expects it will be early July before the industry is completely recovered. The problem has included “cars being in the wrong place, shortages of locomotives, shortages of crews to move those locomotives,” he said.
Kiley said railroads have been able to cut into the number of vehicles awaiting shipment by about 10,000 in the past two to three weeks.
Clowdis said other factors also contributed to the delays, including a focus by some railroads late last year on moving more crude oil by trains. Some railroad companies now are hiring more conductors and engineers and are working to refurbish locomotives and rail cars that were parked during the recession, Clowdis said.
“They have come out of it by in large pretty well now, but it was severe when it was happening,” he said of the delays