For nearly three years the fleet industry has constantly adjusted expectations due to shifting supply chain constraints. These constraints have impacted vehicle acquisition, parts sourcing and transport of new vehicles. Fleet allocations are expected to continue through MY2024, according to Automotive Fleet. And now, the issue of vehicle transport has come to the forefront of concerns.
Why are there Transport Delays?
As with other supply chain problems, there is not one single reason for the problem. The vehicle transport end-to-end process is lengthy, complex and has always been dependent upon many parties including the vehicle manufacturer, fleet management company, transport provider, transport driver, client, client driver, DMV, service provider, rail transport, storage locations, and even the weather. That’s a lot of moving parts with some uncertainty thrown in. All elements must be operating in synchronization to execute the process well. When any one of these falters, the problems can cascade into a system-wide bottleneck.
Unfortunately, vehicle delivery delays continue, and we are experiencing delays as long as four to six months for certain makes and models. This is due to industry logistics that are severely constrained, making it difficult for any OEM or supplier to provide concrete delivery dates. So, where are the system bottlenecks?
Rail Logistical Backups
Remember the port logjams of a couple of years ago? Railyards are experiencing similar gridlocks that are so severe that just basic movement around plants and logistics hubs are impacted. The problems began during the period when freight at the ports stacked up, resulting in backlogs spreading to the rail supply chain. During 2022, rail dwell times rose by a multiple of four. Compounding the problem is a decline in service from railroads.
Why should rail freight backups matter? According to Union Pacific, nearly 75% of new cars and light trucks purchased in the US are moved by rail at some point. Rail is most often used as the most economical means of moving new vehicles; moving freight via long haul trucks could increase delivery costs. Both trucking and rail freight are experiencing labor shortages.
Vehicle Transport Companies
Vehicle transport is an industry that relies on dependability throughout the supply chain. When a vehicle manufacturer has the need to shift production schedules, or there are rail delays, transporters need to shift their own schedules and staffing—often on very short notice. This is an industry that has always relied on predictability and that lack of predictability, whether it is due to OEM delays or rail yard congestion, impacts efficiency. Today’s increased daily demand for transport services creates challenges which result in unavoidable delays.
What are the Causes for these Delays?
The existing state of the industry has been impacted by many of the same problems that have persisted throughout all aspects of the automotive supply chains during the past three years. For both transport companies and railroad, the problems include:
- Driver/worker Shortages. The well-known driver/skilled labor shortages impact both trucking and rail. Transporters are struggling to find Over-the Road (OTR) drivers for multi-state moves or moves that are greater than 300 miles. Railroads also have the same type of shortages for skilled employees.
- Training Curves. Hiring new employees requires training specific to each industry. Our transportation partners are working to accelerate the training curves for new employees.
- Dealership Limitations. The long lead times and delays of new vehicle orders adds uncertainty to the delivery timing, requiring additional follow-up which makes scheduling difficult. In addition, staffing at many dealerships remains lower than pre-pandemic levels due to decreased dealer inventory and pre-selling of dealer vehicle orders.
How Can You Be Proactive?
- Pick up Vehicles Promptly – When you are notified that a vehicle is ready to be picked up at a dealership, please make arrangements quickly. Vehicles left on a dealer’s lot can be subject to damage or lost paperwork either of which can further delay getting that vehicle into service.
- If the ordered vehicle is an EV, be certain that you have coordinated the charger installation prior to vehicle delivery. Some organizations require that the charger be installed before the vehicle is permitted to be delivered. Waiting to schedule the installation could cause additional delays.
- Consider putting a plan in place for vehicles with prolonged delivery timeframes. Interim plans could include short/long term rentals, reviewing your surplus vehicles to fill the time gaps, assessing re-use of turn-in vehicles for temporary assignment to other drivers, and evaluating utilization within your fleet. Consider swapping high mileage vehicles with lower mileage vehicles to lengthen life cycles.
- Pay attention to allocations and ordering deadlines. Our advice remains that you should order as soon as you can. New or adjusted order cutoff dates may be announced with little or no notice. Have your replacement analysis complete and your replacement list ready. Be in touch with your OEM rep.
Wheels plans to be proactive and get you the information that you need. We continue to work on your behalf through engagement with OEMs regarding allocation and production, weekly delayed order reviews, weekly executive leadership meetings, increased staffing to acquire out of stocks, and by rapidly updating our systems with order status. If there is one key piece of advice that we always offer, it is to order early—get your orders into the pipeline. Reach out to your OEM rep and don’t take your allocations for granted.