The US finished vehicle sector is in “dire need of storage” because of the coronavirus crisis, according to Missouri-based finished vehicle provider Acertus. Its executive vice-president of sales and marketing, Michael Malakhov, said that vehicles destined for rental fleets, fleet management companies or dealerships now have to be rerouted.
“We have seen increased storage need across the automotive industry in the last few weeks,” Malakhov told Automotive Logistics. “Many large fleet orders had to be repositioned into storage as rental companies were not able to take the delivery because of their own overflowing rental lots, as rental volumes dropped significantly. Similarly, closed dealers were not able to accept incoming deliveries, which had to be rerouted into storage.
“The trickle-down effect from all this is a dire need for storage,” said Malakhov, who added that safe storage providers are “bursting at the seams”, a situation that is forcing manufacturers to risk parking new vehicles in unsecured areas.
Illustrating this point, there have been multiple thefts of both tractors and trailers in Georgia and Miami in recent weeks. Speaking to the Auto Haulers Association of America (AHAA), Carrie Wall of Bill Fralic Insurance told members to be aware of the situation given so many car haul units are parked up during the current crisis.
“In times of economic stress, occurrences of theft are more common,” said Wall in her correspondence. “Thieves are looking for equipment that is not moving. Our industry has seen a slowdown of freight, which means more equipment is being parked for days at a time.”
Car haulers have been cautioned to carefully monitor their remotely parked equipment via GPS if the equipment could not immediately be brought back to the terminals.
“If possible, non-moving equipment should be taken back and parked at our members’ secure facilities,” Wall advised.
Malakhov, meanwhile warned that the lack of storage extended beyond the automotive industry. “It has implications for the entire supply chain,” he said. “As certain commodities experience high one-way traffic, others sit untouched as stock piles up.”
The reaction to the Covid-19 pandemic will tip the US economy into an almost certain recession, with unemployment claims spiking to a record 3.3m in late March as businesses shut down in an effort to slow the outbreak’s spread, according to international trade analyst The Journal of Commerce.
Whether this will push down the annual revenue generated by the US trucking providers depends on the length and depth of the reduction in economic growth, and the strength of the recovery, which business analysts IHS Markit expects to begin in August.
For more information on the US car hauling industry, see our forthcoming report: In it for the long haul