News Article: Surge in car sales sparks some delivery delays here | Ford Explorer Forums - Serious Explorations

  • Register Today It's free!

News Article: Surge in car sales sparks some delivery delays here

AMR1019

Member
Joined
April 1, 2011
Messages
28
Reaction score
0
Year, Model & Trim Level
2011
Front Page of the Buffalo News.
http://www.buffalonews.com/city/article393195.ece

Updated: April 15, 2011, 12:18 AM


The surge in auto sales has led to unexpected shipping snarls on the railroad tracks -- and some shortages on car lots.

Railroads are scrambling to keep up with automakers' increased demand for more rail cars to move vehicles from the factories to the dealers.

The impact on Buffalo Niagara region dealers is sporadic. Some report delays, albeit minimal; others say they have not been affected.

Railroads are putting more rail cars back into use, after sidelining them during the recession. But as they play catch-up, some vehicle shipments are getting bottlenecked.

The shipping delays are occurring as the auto industry shows signs of rebounding from the recession and building on last year's upswing in sales.

Separately, disruptions in auto production caused by the Japanese earthquake and tsunami persist. The impact of the disaster is leading to temporary factory shutdowns elsewhere in the world.

Frank Downing Jr., president of Towne Automotive Group, which sells Ford and Chrysler, among other brands, said his operations are seeing some effect from the railroad delays.

"It's just taking a lot longer to get some vehicles than it should," Downing said.

His father-in-law's new vehicle is among thousands stuck in Chicago, several weeks after it was produced. Meanwhile, some vehicles ordered more recently have come in, reflecting the unpredictable nature of the impact.

"It's not a major issue at this time," Downing said.

Ford dealers say the Explorer is one vehicle line that has been affected. Chuck Basil Sr. of Basil Ford said he has been told that a lack of rail cars capable of carrying larger vehicles is one factor.

Basil said the dearth of rail cars is not the only reason Explorers are harder to get. Demand for the vehicles is also running strong.

"It's not like we're not getting them," Basil said. "It's just that there's a backlog, and we're waiting."

Downing said many of his Explorers are "presold" to specific customers rather than brought in as stock for the lot. So when those shipments are delayed, there is a customer waiting for it to arrive.

Determining when a vehicle will arrive can be hard to pinpoint these days, Downing said. "That's where it gets frustrating, when you can't give a customer an answer."

Since the economic recovery began, CSX has been redeploying locomotives and rail cars to meet the additional automotive demand, said Robert Sullivan, a spokesman for the railroad.

Early this year, Sullivan said, CSX's automotive distribution network was affected by a combination of factors: winter weather, a surge in demand, new model launches and structural changes in trucking services used by many automakers.

"CSX and its automotive customers will continue to work together cooperatively to ensure timely, reliable shipments," Sullivan said.

Duane Paddock of Paddock Chevrolet said he has seen minor slowdowns of a day or two for shipments of some vehicles. "I'm not waiting two and three weeks to get my vehicles," he said.

Meanwhile, ###cillo Chevrolet and Steve Baldo Chevrolet said they have not seen any impact on deliveries from the railroad issue.

The American Association of Railroads reported shipments of motor vehicles and parts were up about 11 percent through April, compared with the same period a year ago.

Meanwhile, just over a month after the earthquake and tsunami struck Japan, automakers based there are still recovering from the disaster.

Automakers such as Toyota and Nissan are resuming auto production in Japan on a limited scale. But the impact stretches far beyond Japan. In North America, Toyota announced it will suspend vehicle production for five days this month, due to shortages of parts from Japan.

Towne Automotive also sells Mazda, a Japanese brand, but supply of those vehicles has not been a problem for Downing, who said he increased orders last fall to ensure his dealership would have an ample supply in spring.

As a result, he is getting calls from rental car companies and other dealers in search of Mazdas. "But we're keeping them for our customers," he said.

Even dealers who sell non-Japanese automotive brands fear that the problems in Japan will eventually touch the vehicles they sell, since a wide variety of automakers rely on parts suppliers in Japan. For instance, GM in late March idled a truck plant in Louisiana for one week when it faced a shortage of unidentified parts from Japan.

But if a parts shortage does affect other brands, experts say it probably won't show up until late spring or early summer.
 






Wall Street Journal has a similar article now, little more information:

http://online.wsj.com/article/SB10001424052748703385404576258994245530196.html

By JEFF BENNETT And SHARON TERLEP
Already rattled by a looming shortage of made-in-Japan parts, Detroit auto makers are struggling with rail shipping woes that are stalling deliveries of finished vehicles.

About 4,000 brand new Chrysler Group LLC vehicles, mostly Ram pickup trucks, are parked under guard at the Michigan State Fairgrounds & Exposition Center in Detroit. General Motors Co. says it has delayed vehicle shipments by a day or two for as many as 1,000 cars at a time, and Ford Motor Co. is storing finished pickups at a closed assembly plant in Wixom, Mich., and at a lot near downtown Dearborn, Mich.

As the U.S. economy contracted during the recession, railroad operators put hundreds of thousands of rail cars into storage and cut their staffs. Now that shipments of autos, coal and consumer goods are rising again, the nation's railroads don't have enough rolling stock for fast deliveries.

View Full Image

Jeff Bennett/The Wall Street Journal

The Michigan State Fairgrounds & Exposition Center, above on Sunday, stores new Dodge Ram pickup trucks awaiting space on freight cars.
.The rail industry, which ran at slower speeds in the first quarter due to heavy snow storms, also was caught off guard by the quarter's 11.4% surge in automotive railcar demand as auto makers ramped up production, said BB&T Capital Markets analyst John Mims, who follows the railroad industry.

"Rail companies are good at delivering a high volume at a consistent rate," Mr. Mims said. "Where they have the problem is responding to a surge in demand. We will know if it's a seasonal or systemic problem if it drags into April."

The shortage of freight cars has added anywhere from a few days to a few weeks to the time it takes for new cars to reach dealers, forcing auto makers to park finished vehicles near plants around the country.

The shortage of rail cars has "created a hiccup in our system" acknowledged GM spokesman Selim Bingol. Chrysler declined to comment, and Ford declined to provide details of the delivery backups.

"We are working with our transportation partners to address the situation, and we will continue to work aggressively to ship vehicles to our dealers and customers as quickly as is possible," said Ford spokesman Todd Nissen.

.Slow shipments of pickup trucks comes at a tough time for auto makers, which need to get the vehicles onto dealer lots before rising gas prices stall sales. In 2008, consumers shifted buying habits to smaller, fuel-efficient cars when gas prices exceeded $4 a gallon. Unleaded gas is now selling near $3.90 in most parts of the country.

Railroad operator CSX Corp. acknowledged higher auto sales and the shortage of cars have had an impact on its ability to transport vehicles.

"Since the economic recovery began, locomotives and rail cars have been re-deployed to meet the additional automotive demand," spokesman Gary Sease said in an email. "Early this year, our automotive distribution network was impacted by winter weather, a surge in demand, new model launches, and structural changes in trucking services used by many auto makers."

Union Pacific Corp., which ships 75% of all the new vehicles moving to Western states, is attempting to address the problem by adding more locomotives to its lines, said spokesman Tom Lange. UP is also re-rerouting empty freight cars so they get where they are needed faster, and mechanics are doing some repairs on site rather than waiting for a rail car to be sent to a central maintenance facility, Mr. Lange said.

Norfolk Southern Corp. refused to comment. BNSF Railway Co. didn't respond to a call seeking comment. The Association of American Railroads said it had no comment on railroad specific issues and didn't respond to a request to talk about the industry in general terms.Auto makers use a combination of trains and trucks to get their vehicles to dealer lots. Trains are the most economical, allowing auto makers to move hundreds of vehicles to destination points throughout the country. They are then loaded onto trucks and sent to the dealers.

As of March 1, 1.53 million railcars were in use, down from 1.6 million on July 1, 2009, when the recession was in full swing, according to the most recent data released by the Association of American Railroads.
 






Back
Top