Automotive Fleet, October 2018

only added to the complexity and increased the length of time vehicles were sitting The railcar shortage hit in February and continued to challenge the OEMs through August said Krams of Wheels In addition there were logistics and pricing issues that resulted from the railcar shortage Due to the rail shortages units had to be stored at an offsite location which also added to longer lead times Domestic transportation pricing also increased due to the shortages said Crocker of Merchants Fleet Management The railway backlog in particular impacted ship thru units requiring upfitted equipment For instance bodies are ordered but the chassis are delayed which created a domino effect where upfitters didnt produce additional bodies until the chassis arrive These delays shifted one fleets production into another fleets reserved schedule Now body production is out of sync with chassis delivery which means fleets have a depreciating chassis sitting at an upfitter The long term railcar shortage is impacting OTD for all OEMs Normally shortages last from winter to early spring However for 2018 MY the shortage started in winter and is still ongoing in many locations said Erculiani of Element One beneficiary of the rail congestion is the vehicle hauling industry with many OEMs having a positive experience with truck haulers and are considering making some of these switches permanent Railcar shortages was the largest factor in the 2018 MY OTD times being longer than those in 2017 All manufacturers experienced issues with railcars and worked on different means of getting vehicles to dealers such as utilizing truck carriers but those logistics companies were having trouble keeping up with the demand said Tangney of Emkay While there is an additional cost to move vehicles long distances by truck it is less expensive than having vehicles sit stranded waiting for rail pickup All manufacturers have increased their utilization of local truck carriers to expand their normal delivery radius to help clear out rail and shipping yards However there were also constraints with truck carriers The railcar shortage caused a ripple effect with the domestic truck haulers which drove transportation pricing up for domestic manufacturers which also revealed a shortage in truck haulers as well said Crocker of Merchants Fleet Management It is important for fleet managers to communicate with their FMC or upfitter to understand the anticipated lead time and overall production time frames Unfortunately railcar shortages did create a bit of a bottleneck for a good portion of the industry in 2018 with some resulting delays being significant Throughout the year we communicated regularly with our supply chain partners to closely monitor potential delays to ensure we had visibility to any issues on the horizon This ongoing dialogue helped us stay ahead of possible disruptions in the supply chain and allowed us to proactively work with our customers to address these challenges to minimize the impact on their business said Ghosh of ARI Plant Fire in Michigan In May 2018 there was an industrial accident at the Meridian Magnesium Products of America Inc in Michigan The accident caused a series of explosions and fire which shut down the plant The plant is one of the North American auto industrys largest suppliers of lightweight structural parts engine cradles front end carriers instrument panel crossbeams liftgate inner structures and radiator supports causing the incident to disrupt the supply chain for various product lines The Meridian Magnesium plant is the largest producer of magnesium components that supplies companies such as Audi Jaguar BMW Tesla Ford and GM This plant produces the magnesium crossbeams among many other components for Ford F Series and the Chevrolet Express and GMC Savana models This caused ripple effect in delays in producing units which then caused a backlog for the upfitters said Crocker of Merchants Fleet Management The fire delayed the Savana and Express models General Motors had a supplier restriction for the front wheel drive on the Cadillac XT5 models General Motors temporarily halted production of GMC Savana and Chevrolet Express full size vans at its assembly plant in Wentzville Mo FCA acknowledged some disruption to production of the Chrysler Pacifica minivan at Windsor Ontario Canada BMW canceled some production shifts for its plant at Spartanburg S C where it produces the X5 and X6 and Mercedes Benz reportedly canceled some shifts at its Tuscaloosa County Ala plant due to a parts shortage Any issue with parts can have a domino effect on vehicle OTD timing One missing part from the automotive supply chain can halt production across the board said Welch of Enterprise Fleet Management Ford reportedly receives about one third of the plants output suspended production of its F 150 and F Series Super Duty pickup trucks at plants in Kansas City Mo Dearborn Mich and Louisville Ky due to the interruption The Meridian Magnesium plant also supplies components for the Ford Explorer and Flex and the Lincoln MKT products Due to the fire there was a shortage of parts from Meridian Magnesium resulting in longer lead times Ford was able to recover pretty quickly but we are still experiencing delays with the GM Express and Savana vehicle lines due to the residual impact of the parts shortages from the supplier fire and increase in order volume said Gomez of Donlen However there is always a silver lining as was the case with the suspended Savana Express production Although there were multiple issues with the Express and Savana models General Motors was able to utilize the time to overproduce on the Chevrolet Colorado models said Crocker of Merchants Fleet Management AF AUTOMOTIVE FLEET I OCTOBER 2018 24 19TH ANNUAL OTD SURVEY