With new car sales at their lowest point in decades in the US, finished vehicle logistics providers are looking outside their traditional business segments. Car transporter United Road, has grown in the used-vehicle market, in moving repossessions as well as “green” vehicles. Ro-ro carrier Wallenius Wilhelmsen Logistics (WWL) is moving more energy-related project cargo.
About 40% of United Road’s $280m per year revenue comes from the still-growing used vehicle market, including single-unit purchases over the internet. It is the largest shipper of privately-owned vehicles sold for online auctions like eBay and Openlane. While the new car market is down by more than 30%, United Road CEO, Michael Wysocki, told Automotive Logistics that used-car movements have grown enough to make up about two thirds of that drop. “The resale business is certainly exceeding our expectations,” he said.
United Road, owned by private-equity firm Gores Group, acquired Autolog Auto Transport in December 2008 to increase its footprint in the single-unit market, adding 100 national and pick-up and delivery locations. According to Wysocki, United Road uses a real-time tracking system to help it combine those single units with mixed loads of used and new vehicles. “We optimise loads within loads, rather than just taking a truckload of new or used cars,” he said.
Such flexibility in combining new and used, partial and single units has proved crucial in today’s decimated market. Another sad offshoot of the recession in which the company has nevertheless been able to find business has been vehicle repossessions. On behalf of financial institutions, United Road transports cars whose owners have defaulted on payments and takes them to auctions. “That is a growing trade,” admitted Wysocki.
The international used car market, however, has contracted for ro-ro carriers, said John Felitto, Executive Vice President Deputy Head of Region Americas for WWL. Countries such as Russia, which had been a large consumer of used American cars, have raised import duties on used cars to try to revive the domestic market. Felitto said that ro-ro carriers have found growth in shipping project cargo, particularly for energy infrastructure, including parts for wind, electric and nuclear.
Pilot Transport, a subsidiary of United Road that specialises in moving vehicles in covered wagons, has also looked elsewhere while its premium and auto-show business disappears, according to Vice President of Business Development, Brad Mackler. He said Pilot is about to be awarded several contracts for the movement of “green” or electric vehicles, such as for Tesla Motors, Tomcar and Chrysler’s P-pod. It also moves all Daimler Smart cars to auto shows.
Mackler admits that while the new business is positive, he’s unsure that electric vehicles like Tesla (which starts at $109,000) will take off in the current environment either. Nevertheless, moving a small electric car instead of a Bentley is a clear sign of a company adapting to today’s changing car market.