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supply chains

The big glitch in our auto supply chain

By
Doron Levin
Doron Levin
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By
Doron Levin
Doron Levin
Down Arrow Button Icon
May 23, 2014, 11:35 AM ET

FORTUNE — The brutal winter of 2013-2014 has created lingering logistics hassles for the U.S. Auto industry, as tens of thousands of vehicles remain in storage areas due to delays in rail shipments to retail dealers.

Some analysts think that the bottleneck, caused by slowdowns due to weather and shortages of rail cars, won’t be resolved until summer. Until then, customers looking for specific models may find them in short supply if they had to travel far by rail from factories or from ports of entries. Klaus-Peter Martin, a spokesman for General Motors (GM), said “the backlog should be worked through by early June or July.”

The impact shouldn’t be too hard on automaker finances in the short term, because vehicles normally are booked as sales to dealers as soon as they leave the assembly plants. But dealers could be hurt if they lose sales and customers due to shortages. In some cases, buyers simply will postpone their purchases until the model they want is available.

Richard Kiley of Norfolk Southern Railway told the Detroit News a week ago that 180,000 vehicles were waiting to be loaded, compared with 69,000, a typical number for this time of year.

MORE: Retailers still playing the weather blame game

The Alliance of Automobile Manufacturers has complained of poor service to the federal Surface Transportation Board, which regulates railways.

Wade Newton, a spokesman for the trade group, said automakers “have encountered persistent rail service issues.” He said carriers’ failure to provide a sufficient supply of empty railcars to transport finished vehicles is — by far — among the greatest logistics problems facing our members.”

The railroads say the cold temperatures force them to operate trains slower than usual and with fewer cars.

Toyota reported that its RAV4 and Highlander sport utility vehicles were in short supply as a result of the delays, as well as its Lexus RX crossovers. GM’s new full-size pickup truck has been hit, as has Ford’s.

But one auto executive, noting that grain and fertilizer shipments have been hurt as well said “what’s happened to us isn’t as bad as what’s going on in other industries.”

About the Author
By Doron Levin
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