“There are a lot of unanswered questions on things like Mexico,” said Scott Goodwin, senior manager for transportation at the Volkswagen Group of America. “The network has changed dramatically. I don’t think we have enough railcars.”
With more Japanese and German brands currently expanding capacity in the US and especially in Mexico, the import share as a percentage of the market has been declining, from a high of 26% in 2009 to 22% currently said Mason, point to official US trade data. He expects that imports will level off or decline to around 3m units by 2020, or about 17.5% of US sales.
However, some of that decline masks a switch to imports from Mexico, volume that requires more rail and short-sea transport. Carmakers have been looking at new export routes from Mexico to the US, with Nissan, Ford, Honda, GM and Mazda all adding short sea routes to supplement traditional rail flows.
The shifts to Mexico, as well as other import and export developments, have led some manufacturers to either adjust their port network or enhance the services they use there. Honda and Nissan have recently added port calls to their network, for example. According to Scott Pollard, manager of vehicle logistics at Nissan, the carmaker, which recently opened up a new plant in Mexico, is shipping enough vehicles from there to the US to add further port calls. “We used to only ship from Mexico to the northeast via Baltimore, but now we have enough volume to ship to the port of New Jersey as well,” said Pollard.
Moving more than metal
Don Asdell, chief executive officer at GAPS, a vehicle processor owned by Glovis America, pointed out that port terminals can also be an effective place to run campaigns and contain recalls. “Recalled cars can be addressed before they are fully put into the market, for example, which can help to limit bad exposure,” he said.
Meanwhile, Jaguar Land Rover North America has recently started to use ports to install certain options and accessories, much of which had previously been left to dealers. Jim Harrington, ports operations and vehicle logistics manager for the carmaker, pointed out how equipping vehicles at the port simplifies the sales process and helps to ensure quality, and that original parts are used. “This additional work is not replacing the retailer fit channel but has augmented it,” he said.
Harrington also highlighted JLR’s vehicle tracking system, which integrates and automates transport orders, provides real time visibility of vehicle statuses, and can be used to update and control all vehicle activities through the delivery to dealers. The system is web based, and also automates payment to logistics providers.
Port investment and funding
Jaenichen pointed to one initiative called PortTalk, in which state transport departments and metropolitan planning organisations (MPOs) spend the day with the DOT to develop solutions to their port and transport systems.
“Of the 42 territories in the US with some kind of sea or inland port, only eight states have a dedicated coordinator to bring maritime into their planning,” he said. “Better regional planning can help improve ports.”
Jaenichen also pointed to a new port planning and investment toolkit that the Maritime Administration has created together with the American Association of Port Authorities. The toolkit will include detailed information on how to design infrastructure projects that are more likely to attract public and private money. It will be available later this year.
"Of the 42 territories in the US with some kind of sea or inland port, only eight states have a dedicated coordinator to bring maritime into their planning. Better regional planning can help improve ports" - Paul Jaenichen, Maritime Administration, US DOT
"One problem is that the TTX model is linear. It doesn’t account for the fact that trains run slower at certain times of year" - Scott Pollard, Nissan North America
Pollard acknowledged that, in some cases, the network just struggled to keep up. The carmaker’s plant in Smyrna, Tennessee, for example, is located near one railway's network of automotive terminals in the southeast, and it is therefore relatively easy to obtain empty wagons. The carmaker’s other plant, in Canton, Mississippi, is near the end of another railway's line, and has a much harder time obtaining capacity.
Executives nevertheless remain anxious about repeating a similar situation, even if there is little to be done to avoid the extreme weather. “We cannot survive by shutting down our plants,” said Manns.
Looking to the world
Such growth in exports looks set to be steady over the coming years, particularly as North American production heads towards the 19m mark by the end of the decade. While there may be some declines in imports in some areas, the overall growth in output and sales will mean that the North American port and shipping network needs to be kept optimised and updated.