Why the US Rail System is Struggling to Deliver New Cars
The COVID-19 pandemic has caused a lot of disruptions in various industries, and the automotive industry is no exception. From shutdowns to chip shortages, the industry has been struggling to keep up with demand. However, a new problem has emerged, and it has to do with the US rail system.
According to reports, some dealers are complaining that the rail system is no longer up to the task of delivering new cars. This is due to a shortage of rail cars, specifically the enclosed multilevel units that transport about a dozen machines at once. As a result, roughly 70,000 new cars are sitting idle at or near their facility of manufacture.
Why is there a shortage of rail cars? One reason is the new routing of vehicles. Some overseas manufacturers are using different ports and sending their cars on longer rail journeys once they arrive in America. The same goes for rigs produced in Mexico; they need to be distributed somehow but places like Ramos Arizpe and Saltillo aren’t exactly next door to major U.S. markets. This ties up autoracks for extended periods.
Another reason for the shortage is that most autoracks are part of a pool that is shared by multiple railroad companies and administered by a third party. This means that there is a limited number of autoracks available, and they are in high demand.
The shortage of rail cars is not only affecting the automotive industry but also other industries such as food and grain shipments. However, the impact on the automotive industry is significant as it is causing inflated transaction prices.
The Impact on Dealers
Dealers are feeling the impact of the shortage of rail cars. Some are reporting lower sales numbers than usual, while others have a backlog of cars waiting to be delivered. For example, Matick Chevrolet in Redford Township only sold 165 new cars last month when they used to do “twice as many.” The dealer has 54 vehicles on the ground and 143 in transit.
The shortage of rail cars is also affecting the availability of certain models. Dealers are struggling to get their hands on popular models, and customers are having to wait longer to get the cars they want. This is causing frustration for both dealers and customers.
The Future of the US Rail System
The shortage of rail cars is a problem that needs to be addressed. The US rail system is a vital part of the transportation infrastructure, and it needs to be able to keep up with demand. One solution is to increase the number of autoracks available. This could be done by building more autoracks or by repurposing existing rail cars.
Another solution is to improve the efficiency of the rail system. This could be done by improving the routing of vehicles and reducing the time that autoracks are tied up. It could also involve better coordination between railroad companies and the third party that administers the autorack pool.
Conclusion
The shortage of rail cars is a problem that is affecting the automotive industry and other industries as well. Dealers are struggling to get their hands on popular models, and customers are having to wait longer to get the cars they want. The US rail system needs to be able to keep up with demand, and solutions need to be found to address the shortage of autoracks. Otherwise, inflated transaction prices will continue, and the industry will suffer.
