Automotive Fleet, October 2018

delays Vehicles are transported to upfitters and dealers in specially designed fully enclosed railcars that have either two or three levels within them The problem is that there is a shortage of rail autorack carriers that cant keep pace with auto industry growth The 2018 models had a longer OTD primarily due to the railcar shortages and continued shipping delays In order to maximize the existing railcars efficiently the rail heads have implemented a temporary policy to completely fill railcars before shipping This strategy has not been done in the past and in turn has increased lead times for all models manufacturers said Crocker of Merchants Fleet Management In efforts to alleviate the bottlenecking at the rail yards and vehicle distribution centers manufacturers like Ford Motor Company have offered to allow ordering dealers to arrange their own logistics at the cost of domestic transportation The increased ratio of trucks sold has further compounded the railcar shortage because a fewer number of trucks due to their larger size can be loaded on a railcar than cars The markets shift to SUVs typically require a specialized railcar that is fitted differently than the standard railcars to allow SUVs to be stacked Without enough of these specialized railcars many vehicles were delayed as the amount of SUVs per train is cut in half said Tangney of Emkay The ongoing railcar problem seems to have gotten more acute in 2018 The railcar shortage created huge backlogs of vehicles needing to be shipped The industry wide railcar shortage had a much greater impact this year than it had the past two years Trucks SUVs and van demand increased and these larger vehicles often require a bi level railcar which means fewer vehicles can be moved at one time In addition a truck carrier and driver shortage Fleet Management Another issue from the backlog was getting completed units back into the OEM transportation system The increased volume of units stretched the resources of some upfitters to complete orders on a timely basis The sheer volume of orders has impacted order to delivery for 2018 models utilizing ship through as well as creating some delays in getting vehicles back in traffic While this increased the order to delivery time some of this was expected and had been previously communicated with clients said Reynolds of LeasePlan USA Compounding the upfitter backlog problem was the shortage of railcars to move the upfitted vehicles once they were completed The railcar shortage also had a bit of a domino effect as the delays also extended to many upfitters Pickup times for completed units were higher than normal due to the shortage and several upfitters experienced storage space limitations which further impacted some production schedules In some instances delivery times were nearly twice the normal average said Ghosh of ARI To bypass the railcar availability issue some OEMs sought to use truck carriers Several OEMs have used outside carriers to try and reduce some of these shipping delays but in some cases it increased delays as vehicles bypassed ship thru and had to be back hauled to the appropriate upfitter or vehicles being delivered to the wrong dealers said Gomez of Donlen Railcar and Carrier Shortage Railroads are the primary long distance transporter of cars and trucks Railroads are a key component of the OTD cycle but are beyond the control of the fleet industry For the past 20 years the nationwide railcar shortage has been a factor for fleet delivery Upfitter Backlogs The large volume of truck and van orders placed in the 2018 model year created backlogs at most upfitters Upfitter delays were mostly due to increased order volumes and surge volumes causing backlogs in production This was caused by capacity issues at the upfitter plants as well as delays in parts production This also impacted the timing of putting vehicles back into shipping contributing to backup and delays in railcar traffic said Erculiani of Element Reinforcing this assessment was Armstrong of Mike Albert Fleet Solutions Upfit supply and demand issues are still a major concern as they are not able to keep up with the increased vehicle volume said Armstrong Contributing to the backlogs at upfitter facilities was the tight labor market which reduced vehicle throughput of completed upfits As order volume has increased for truck and cargo vans so too has the upfit demand Although our upfit partners are ready to hire additional employees to meet the demand many of them are having challenges finding qualified candidates to fill these positions said Gomez of Donlen The backlog is causing on complex upfitting along with standard service bodies have higher lead times Also as upfitters open new plant locations the quality and consistency in the upfit has declined resulting in a halt in production to correct these issues added Gomez These comments were echoed by Krams of Wheels Lead time across our supplier network as a whole has gone up over the past 12 months due to increased volume Most suppliers are working at or beyond their normal production capacity Due to labor constraints many upfitters are unable to add production capacity as fast as they would like to said Krams One type of upfit that has experienced delays was service bodies Service body lead times have increased on standard models from a typical 6 8 weeks to 10 14 weeks and in some instances were as high as 40 weeks on custom service bodies said Crocker of Merchants Fleet Management The upfitter backlog became further exacerbated as the model year progressed Upfitters schedules were very full toward the end of the model year which subsequently affected OTD said Welch of Enterprise AUTOMOTIVE FLEET I OCTOBER 2018 22 19TH ANNUAL OTD SURVEY TRUCK 2018 ORDER TO DELIVERY TIMES TRUCK MODELS 2018 MY OTD DAYS 2017 MY OTD DAYS CHANGE DAYS 2018 GMC Canyon 50 N A N A 2018 GMC Sierra combined 67 70 3 2018 Chevrolet Silverado combined 67 65 2 2018 Chevrolet Colorado 70 64 6 2018 Ford F Series F 150 F 250 F 350 70 79 9 2018 Nissan Titan 83 95 12 2018 Toyota Tundra 86 93 7 2018 Toyota Tacoma 4x4 88 82 6 2018 Nissan Frontier 91 N A N A 2018 Ram combined 91 79 12 SOURCE AF RESEARCH DEPT