Rail-car shortage hampers auto shipments
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North American automakers are struggling with a shortage of rail cars used to transport cars and light trucks from assembly plants to dealerships.
As of May 18 , daily inventories of vehicles awaiting shipment totaled 81,470 units -- well above the standard daily inventory of 69,000 vehicles, according to a report from TTX Co., a Chicago firm that coordinates rail shipments of vehicles for the railroad industry.
Auto executives fear rising North American vehicle production could trigger chronic -- and serious -- transport bottlenecks.
"It's a nightmare right now," said Mike Nelson, Toyota Motor Corp.'s national manager of rail strategy and operations.
Toyota has a daily inventory of 10,000 vehicles awaiting shipment from its North American assembly plants, said Nelson, a participant in a May 8 logistics forum sponsored by the Automotive Industry Action Group in Troy, Mich.
"If it gets to 12,000 or 13,000 units, we'll have trouble," Nelson warned. "We were there earlier this year. We watch this on a daily basis."
Asked about the shortage, TTX declined to comment.
In a written statement, CSX Transportation said it expanded its fleet of rail cars this year, without specifying how many it acquired. The railroad, which serves the eastern United States, said it will purchase additional units in 2013 and beyond.
The rail-car shortage is especially bad for assembly plants in the Midwest, and somewhat less serious for West Coast ports that handle shipments of Asia-built vehicles.
The delays will be tough to fix because automakers require special rail cars, called autoracks, to transport vehicles. Bi-level autoracks carry 10 full-sized SUVs and pickups, while tri-level autoracks hold 14 cars.
The railroads deliver empty autoracks to an industry pool managed by TTX, which sends them where they are needed, said Martin Colbeck, a claims manager with Auto Warehousing Co., a Tacoma, Wash., logistics company that loads cars and trucks at rail depots.
If TTX runs short of autoracks, the automakers must wait their turn.
The railroads have a shortage of tri-level autoracks, now that cars are once again outselling trucks, according to Colbeck. But railroads need time to build these transports, and forecasters did not expect North American auto production to recover so quickly after the recession.
Truckers generally carry vehicles up to 75 miles or so from the railhead to the dealership, Colbeck said. Costs rise too high for truck routes that are more than a couple of hundred miles.
Automakers are frustrated because there is no cost-effective alternative to the railroads. "The penalty is exorbitant," Colbeck said. "They can't do it. So the automakers wait for the rail cars."
Automakers, which generate 8 to 9 percent of total rail freight, have little leverage with the railroads, according to Nelson. The railroads get bigger profits from transporting truck trailers on long trains of flatcars.
There seems to be no quick solution to the rail transport bottleneck, Nelson said. "You can't force anybody to do anything," he said. "I think we'll have this problem over the next couple of years."
You can reach David Sedgwick at dsedgwick@crain.com.
