Following news in March that US finished vehicle carrier Allied Systems Holding had withdrawn its distribution services for Chrysler and GM following a dispute over employee pay and haulage rate rises (read more here), rival carrier Jack Cooper Transport has announced that it has picked up part of the business.
The new contracts will involve delivery of up to 550,000 vehicles per year from 15 assembly and distribution centres in the US and Canada.
To support the business Jack Cooper is investing $12.5m in the purchase of 175 used transporters and has redeployed 300 rigs from its existing laid up fleet.
In a letter to employees CEO of Jack Cooper Holdings, Bob Griffin, said: “We have plans to invest approximately $50m additional this year in our fleet, including refurbishment of nearly every idle rig in our fleet. We believe it is likely we will win additional business this year, which will enable us to fully utilize all of our parked rigs.”
The company already operates a fleet of approximately 1,250 car carrying rigs in the US and Canada but the extra investment backs up findings from last year’s Automotive Logistics Global conference in Dearborn, Michigan in which 52% of logistics providers said they would invest in new assets and staff against 20% who said they would be redeploying stored assets and furloughed staff.
Despite the deployment of nearly 500 rigs for the business, Automotive Logistics News has learned that this still leaves a shortfall as Allied has withdrawn an estimated 1,200 of the carriers it was using for the GM and Chrysler business. The company is holding out for an increase in haulage rates. An industry source has said that the missing capacity cannot currently be filled by existing capacity in the marketplace.
Meanwhile, drivers employed by Allied, who rejected the proposed 20% wage cut in March, are still being paid by the company despite the withdrawal of services. This is because the company is eager to retain the skills of the drivers, according to Rick LaPorte, president of the Canadian Auto Workers (CAW) Local 444 chapter based in Windsor, Ontario.
“Our members are still employed by Allied Systems and continue to be paid by the company,” he told Automotive Logistics News on Monday this week. “None of our members have moved over to another company, we remain hopeful that Allied systems can find new work so our members can return to the job.”
Car hauliers in North America are eager to retain skilled drivers in the face of a growing shortage. This year the trucking industry in general is likely to face a deficit of 400,000 drivers, and the shortfall in the car carrier industry is of particular concern given the extra demands put on a finished vehicle delivery drivers at the same time that pay and benefits have been in decline.
New legislation in the form of the Comprehensive Safety Analysis rule will also limit the amount of hours each driver can work leaving companies having to redesign routes at a cost, as well as face the risk of driving out capacity and lowering productivity.