North American finished vehicle carriers are facing capacity constraints and financing problems that are set to worsen if the number of vehicles moved per year rises above the current forecasts.
Light vehicle sales for many carmakers are currently around 30% higher this year compared to 2009, and the US market is on pace to finish the year around 11.5m-12m units (compared to 10.4m in 2009).
Talking at this year’s inaugural Finished Vehicle Logistics North America conference in Long Beach, California, Michael Wysocki, CEO of United Road said, “We are struggling at 11m units, and if we get up 12m-13m there simply is not the capacity. We will have to innovate.”
Scott Goodwin, national manager of vehicle logistics for Glovis America, the logistics arm of the Hyundai-Kia Group, told Automotive Logistics News that even those carriers that were willing to invest were running into problems getting financing for expensive capital outlays. He also pointed out that, even prior to the recession, carrier fleets were on average nearly ten years old, and that many would need to be renewed as the industry returned to growth.
“With only two car carrier manufacturers left in North America–Delevan and Cottrell–down from what used to be 13, they will not have the capacity to produce 6,000 new carriers in a year if that it what is needed,” Goodwin said.
Ford’s Walter Lowe, manager of North American vehicle logistics, questioned how the industry could have enough capacity when sales were close to 17m units per year, but could be so tight now at such a lower level. He called for carriers to work together with carmakers to help find a solution before the situation worsened.
Greg May, President of Jack Cooper Transport, presented another side to the potential capacity shortage, pointing out that, with the highway bill up for reauthorisation and investment needs of around $500 billion to address the country’s aging infrastructure, the highway trust fund has only about $200 billion.
Meanwhile, with the move to lower fuel consumption and electric vehicles, there would be a drop in fuel tax revenue, the traditional way to fund highway investment, which would mean the US needed to find a new tax revenue, as a lack of investment would lead to further congestion and bottlenecks.
The full conference report is available here.
