While dwell times at the handoff points between modes continue to waste time and drive up costs OEMs moving large volumes continue to benefit from the efficiency of direct services.
“We want to get direct service between hubs for the most part we have enough volume to go direct on rail and truck,” said Jeff Dziereicki, GM’s team lead for Vehicle, Ocean and Rail Procurement. “It becomes the most efficient way because it lowers the amount of touch points you have and maintains a higher level of quality.”
Speaking at the recent Automotive Logistics Global conference in Detroit, Dzeiericki said that from an intermodal standpoint, the current network GM has suits its needs when capacity is there and creating a further gathering of product at different nodes doesn’t suit the carmaker’s exact needs.
At the same time, however, there is plenty of evidence that capacity pressures in certain areas coexist with empty legs in others, with movements in and out of the ports being a good example.
Rick Powers, director of marketing at the Port of Baltimore, noted that export volumes to the port were coming inbound on rail but that a lot of those rail cars were returning empty while at the same time empty trucks were arriving to pick up the imported new vehicles from the port. This is largely down to the regional nature of the business of shipping vehicles to the dealerships.
“Every time we see that we think there has got to be a better way to handle this and reduce those empty miles,” said Powers.
He went on to say that the port had talked to importers in the past about looking at inland hubs so that the ocean vessels could discharge the vehicles direct to rail for shipment to an inland point where the trucks could then take over for the final leg. However, that talk has not amounted to much.
“I don’t think you can do it door-to-door but if you use that idea of an inland hub maybe that is a possibility, but there doesn’t seem to be a lot of interest in that these days.
The point was backed up by Timothy Butt, market manager – Automotive for rail provider Norfolk Southern, who said that something would have to change from the manufacturing side, namely a greater engagement with the comingling of vehicles, something he said the rail carriers were already doing.
“There have got to be some savings in the network to be able to do that, to launch it off the court and use the assets that are already at the port to move the vehicle closer to the ultimate destination,” he said.
Questions around investment
However, commitment to such a solution brings with it concerns about investment in the face of the often quickly changing nature of carmaking.
Mike Nelson, national manager of Rail Strategy and Operations at Toyota Logistics Services highlighted that OEMs have had to build in the flexibility needed to respond to market demand and so within six months a plant that had been building Yukons or Sequoias could suddenly be building Corollas or small Chevy Crusiers.
“The challenge on the supply chain side is, if all of a sudden we as an industry go in an opposite direction, from smaller cars to larger trucks or vice versa, we are are locked in, particularly on the rail side when it comes to investment,” he said. “We may end up on the wrong side of the fence with a bunch of rail cars that we can’t use because the market has changed.”
Nelson said that one of the things the company was looking for with its suppliers was flexibility. “It’s a tough one. I’m not sure there is a good answer but it’s out there and is something we have to take into consideration as we look at the supply chain of the future.”