Trucking capacity in North American vehicle logistics could become as big a problem as the driver shortage, if not bigger, and without some significant investment the crisis will continue to get worse, especially by the fourth quarter of this year when production is expected to increase, according to carmakers and logistics providers speaking at last week’s Finished Vehicle Logistics North America conference in Newport Beach, California.
However, with costs for equipment soaring, hauliers in the region are looking for collaboration, including with rail providers, in an attempt to make capacity gains through more efficient use of resources.
According to Mike Riggs, chairman of Jack Cooper Transport, the driver shortage in North America is a real crisis but capacity for finished vehicles is going to be the biggest issue because hauliers cannot afford to invest in equipment to replace that lost during the economic downturn.
“It will be like trying to sell houses without mortgages,” he told delegates. “All the lenders for car haul and the trucking companies have bolted since 2008, they just don’t exist. There is no one that wants to be in the business.”
This absence is significant given the wider forecast published this week by the American Trucking Association which saw a 24% growth in all freight tonnage in the US through to 2022, with 70% of it being carried by truck by then, up 3%.
Riggs went on to say that trailer prices have gone up from the average $80,000 price tag to $130,000 which means those hauliers need financing, something many of them don’t have.
“We used to use a budget of $150,000 for the truck-trailer combination. If we’re 1,000 trailers short, it’s a quarter of a billion in capital and there aren’t a lot of takers,” he said.
Riggs said collaborative efforts were needed with the railroads to find savings through efficiency.
This was backed up by Toyota Logistics Service’s Mike Nelson, national manager of Highway Transportation Logistics, who reiterated the point that collaboration between truck and rail providers was essential for the industry to move forward and meet new demand.
“Obviously there is a connection there because a trucking company can’t operate out of a rail head without knowing what is going on with the railroads,” he said. “[But] we’ve got to work better with what we’ve got.” Nelson went on to ask attendees what it was that was needed to get truck carriers communicating more accurately with rail providers.
Richard Kiley, group vice president – Automotive at Norfolk Southern Railway, offered reassurance there was more collaboration than was immediately apparent. At the company’s haulaway summit held late last year Kiley said he was amazed by the ideas that the carriers had provided and from the five “actionable” points gleaned from a raft of ideas proposed, Norfolk Southern is now running a number of pilots including one based on early indications of the build load of vehicles released from processing centres.
“It is designed to inform us what the load makeup should be,” said Kiley. “We provide the [vehicles] at one location within the facility so the driver only has to pull into where they are parked, load and is ready to go. The focus is on creating a better turnaround for the carrier.”
“It’s just an example of the sort of collaboration that is going on that doesn’t get much press,” he said.
It was this sort of collaboration on finding capacity that impressed Markus Gichert, manager of Vehicle Distribution, Mercedes-Benz USA. Commenting on the two days of discussion at the conference he said: “I was surprised to see how much passion there was on this issue about solutions. We fail or succeed together and I want us to succeed together. We aren’t going to add capacity before Q4 so we need to use it more efficiently.”
For a full report on the conference, read more here