This is no way to run a railroad.
Complications arising from the merger last August of two major railroads have stranded tens of thousands of vehicles in bottlenecked rail yards, routed some vehicles to the wrong destinations, and temporarily idled a Chrysler Corp. assembly plant because of parts shortages.
Dealers, particularly those in the Southwest and California, have been cut off from some inventory since the merger of Omaha, Neb.-based Union Pacific Railroad Co. and San Francisco-based Southern Pacific Transportation Co.
Ford Division General Manager Ross Roberts says the delays are worse now than at any time since the railroad merger.
'We've got rail cars (loaded with vehicles) sitting in rail centers all over the country,' he says. 'The biggest problem is in Texas and California, and those are big markets. It's just a mess, and has been for several months.'
Chuck Scott, general manager of Centroplex Ford in Kileen, Texas, is running out of patience.
Customers have waited so long for 30 ordered vehicles to arrive in a Dallas rail yard that Scott is sending drivers the 140 miles to retrieve them rather than wait for the transporters to deliver them to his dealership.
Union Pacific moved 625,000 rail cars of vehicles and parts in 1996 and currently leads U.S. rail carriers in auto-related freight volume. General Motors, which ships 70 percent of its vehicles via rail, is Union Pacific's second-biggest customer.
The auto industry's rail headache could get worse. Another large merger, between Norfolk Southern Corp., CSX Transportation, and Consolidated Railroad Corp. (Conrail), is in the works.
Union Pacific spokesman John Bromley says a mismatch of computer systems, heavier traffic due to the healthy economy and a shortage of capacity in Southern Pacific's older rail yards contributed to the logjam.
Bromley says $970 million is earmarked for expanding rail yards and improving tracks.
He confirmed automakers have 'more than hinted' that they want compensation for additional shipping costs. He says the railroad is negotiating with the industry over a settlement.
BY SEA, NOT LAND
A source at GM says only one in five of its vehicles is reaching its designated dealership on time.
GM's Mexican-built Chevrolet Suburbans and Tahoes are the hardest hit by the problems, says company spokesman Alan Adler. Instead of using the railroad, GM is diverting the vehicles to the port cities of Mazatlan and Altamira, where they are put on ships bound for the United States.
'There is a cost premium to shipping this way,' says Adler. 'We have the makings of a commercial claim' because of extra costs, he said, declining to say how much GM would seek in reimbursement.
The factories are tight-lipped about negotiations with the railroads over compensation. But dealer Don Luke of Bill Luke Chrysler-Plymouth/Jeep in Phoenix said factory officials hinted to a meeting of top dealers that it would seek at least 'a couple million' from Union Pacific.
Instead of the normal eight days, Luke's first shipment of Dodge Durangos took 30 days to arrive after being mistakenly routed to California and then Tucson, Ariz.
Chrysler allocated Luke a few more Durangos to make up for the delay, but he estimates he has lost up to 100 sales since the tie-ups began. Because Chrysler dealers normally cannot receive any more vehicles until they sell what they have under the company's turn-and-earn system, 'it really starts costing you money,' he says.
Chrysler Corp. has 46,000 vehicles stuck on idle rail cars, says Gary Henson, vice president for assembly and stamping operations. The company has twice idled its Newark, Del., plant, which makes the hot-selling Durango, because of troubles getting stampings, Henson says.
A spokesman for Mercedes-Benz of North America Inc. confirmed that deliveries of M-class sport-utilities from its plant in Vance, Ala., have been delayed because of the tie-ups. The company is routing its west-bound vehicles around Texas.
Nissan is moving some shipments to another railroad, says spokesman Kurt von Zumwalt of Nissan North America Inc.
Parts and vehicles take about two or three days longer to travel to and from the company's Smyrna, Tenn., factory, which makes Nissan Sentras and Frontier pickups. So far the plant has not lost any production.
'We do think it's getting better, but it has made it very challenging,' von Zumwalt said.
The automakers have provided some relief to dealers in the form of cash or floorplan abatement. A Ford spokesman confirmed the company is paying dealers a flat $45 for each vehicle they pick up from rail yards in Atlanta; Los Angeles; Houston; Newark, N.J.; and San Antonio, Texas.
But Centroplex's Scott says the sum does not cover his costs and 'isn't in line with what it needs to be.'