Passenger vehicles are typically carried on tri-level rail cars, while SUVs and trucks are transported on bi-level cars. There has been a higher demand for a bi-level fleet as the preferences shift, but it is also causing issues on the haul-away side, she said.
“I think this consumer preference change ... not only has impacted rail from a car supply perspective, but I think you’ve also seen the impact of destination haul-away,” she continued. “You can’t fit as many trucks or SUVs on a destination haul-away carrier as you can passenger cars.”
The length of haul to market is much longer with the proliferation of production in Mexico, said Mark Boucher, the director of vehicle logistics for the Volkswagen Group of America. Cycle times for railroads have gone up about 15 percent to 20 percent, he said.
“I think the railroads have done a good job getting the right equipment into the market. I just think we’re going slower,” Boucher said. “Admittedly destination dwell is a piece of that.”
Improving visibility throughout the supply chain — from the OEM to the dealership — would help ensure the proper equipment is in place at the correct time, said Kenney, who added railroads have started focusing on keeping the right equipment supply for origin plants as they face challenges at destination. In an industry that sees seasonal surges, OEMs need to let the railroads know about possible changes as early as possible, she said.
He later added, “One of the biggest challenges for the industry is the predictability aspect and making sure you have the right equipment at the right spot at the right time.”
Charles Franklin, manager of export logistics for American Honda Motor Co. Inc., said he would like to see more flexibility in the intermodal network.
“Sometime because of capacity or positioning or all those different things, it doesn’t work with what I’m trying to do,” Franklin said. “I need to move my car and I need to move it now.”
Boucher said he would like to see more rail and port capacity, along with more port flexibility. Ports, especially on Mexico’s eastern side, aren’t big enough to handle volumes, he said. Port infrastructure — both in Mexico and the U.S. — could be “expanded to meet current demand,” Williams said.
“I think there certainly has been increased interest in moving vehicles from Mexico to the U.S. by ocean,” Williams said. “The challenge today is the cost element. Right now ocean just can’t compete with the rail cost. Obviously, cost is critical for the OEM.”