It may not be a universal concern nor observation, but where there’s smoke there’s fire, my father always said, so I’ll go on record stating logistics issues continue to frustrate remarketers and dealers.
Shipment delays erode how fast vehicles can be wholesaled — and those assets resold and taken off the books — an issue of turn that concerns remarketers and dealers alike.
Everyone impacted agrees: Improving load factors, removing delay from the dispatch and delivery cycle, and finding ways to cut out time waste will help to remedy this logistics problem.
The changing nature of how vehicles are sold and purchased has added unique pressure to vehicle delivery logistics.
For instance, a significant factor is the proliferation of online auctions and car sales, which means “transportation becomes a critical piece in the process. You can sell as many cars as you want to online, but if you cannot move them in a timely fashion, you’ve had it,” said Paul Seger, executive vice president of asset remarketing for Element Fleet Management, speaking to me recently in his other capacity as president of the International Automotive Remarketers Alliance.
“It (transportation) is a concern from a time perspective. There are a lot of efficiencies to the cycle time that can be improved upon that we can work together to solve. We’ve never really worked on it as an industry, and there are opportunities there,” he said.
One dealer experiencing logistics concerns is Hudson Automotive Group, with 18 dealerships in South Carolina, Georgia, North Carolina, Ohio, Louisiana, Kentucky and Tennessee. Jon Burkeen is corporate velocity manager, responsible for making sure inventory makes it from buyers through recon and to the front line in as little time as possible.
“I know that right now transportation should be a three-day process, and it’s like a six or seven-day process,” Burkeen said. “Whether we’re buying from 200 miles away or 600 miles, it seems the closer we’re buying, the longer it takes, and I don’t get that.
“I’ve been studying and watching this for years — we’re tried buying in Florida and not buying in Florida; we’re tried buying within 200 miles and outside 200 miles. It’s not like it was 10 years ago, when you go to auction, raise your hand, buy two truckloads and get those cars picked up that afternoon, and they’d show up at your store the next day. We don’t buy 10 cars anymore in the same place. We buy one or two here and there, and that’s the biggest hindrance. Transportation is a headache; we’re transporting 450 to 550 cars a month, and we’re using, probably, 300 to 350 different transportation companies to do that,” Burkeen said.
“It’s an industry issue, and it it’s been this way for the last five years,” Burkeen said.
Industry observers cite transport industry consolidation, drive-time restrictions determined by e-log standards, and driver shortages as factors contributing to transport tightness. The American Trucking Associations said driver shortage in 2018 hit a high of 60,800, up from 50,700 in 2017, an increase of nearly 20%, reported Transport Topics. Most of the reported shortage is for over-the-road transport drivers, but the car hauling industry has seen its lack of qualified drivers too in recent years, said Guy Young, general manager for the Auto Haulers Association of America.
Transport load factor remains a concern. Of the approximately 17 million new cars to be produced and shipped this year, 70% will be pickup trucks, crossovers and SUVs, which create carrier stacking challenges. The need to ship more substantial, longer and heavier vehicles creates new transportation concerns. Carrier capacity is often limited to eight larger vehicles today instead of the 10 when most vehicles moved were sedans. Smaller loads mean fewer cars moved, burdening truck and driver supplies.
“At the end of the day, it’s still the problem we’ve had for years in our industry, a shortage of trucks for the 39 million vehicles that will move this year,” John Robertson, executive vice president of business development for ShipYourCarNow, told me recently for a related article in Auto Remarketing.
Robertson said many larger transport companies focus primarily on new car hauling and, thus, are not available for the secondary market, for fleet companies and others needing to move 20 to 100 cars or for smaller loads.
Michael Briggs, president and chief executive officer for CarsArrive Network, part of KAR Global, offered a different perspective, sharing by email. He said supply/demand are “in harmony.” He said based on his 30 years of moving cars, “there’s no shortage of trucks and certainly no shortage of cars.”
Help is coming, though, from various sources.
TradeRev, a digital auction platform that’s also part of KAR Global, has added a new app for speeding up vehicle delivery times. Keith Crerar, TradeRev executive vice president of global operations, told me by telephone the app removes delay from the logistics cycle by helping connect buyers and shippers more quickly.
TradeRev said new service level standards with its carriers and the addition of new independent carriers to its platform are helping it take time out of logistics.
TradeRev-provided data help illustrate these points:
- From March to July, TradeRev purchases with transport options on deliveries under 100 miles end to end dropped from 5.7 to 3.1 days. It said its goal is two days.
- Delivery time, regardless of distance, has been cut on average to 3.5 days from 6.5 days.
- From March to July, TradeRev purchased vehicles with transport options delivered in under two days increased from 23% to 44%.
- TradeRev said it has seen an increase in buyers opting in for its transport option, with 88% of vehicles purchased in July including the option.
Briggs noted that the CarsArrive platform and mobile app, which streamline freight acceptance, automated payments and settlements, help trucking companies manage drivers, track compliance with required rest periods and manage costs.
“This is a very favorable time to start a car hauling business,” Briggs said. “In the past, you had to have contacts to line up cars to haul. Now the technology enables every car hauler to have the same access to the millions of available vehicles for transport. As long as haulers have the proper insurance and are good operators, they can move those cars. That’s a win for everybody.”
In August, JMN Logistics announced a nearly $3 million investment in 16 new automotive transport trucks, it said in a company press release, which will put more capacity on the road. In September, carrier United Road announced a mobile-based logistics platform called Haully, said to make it easier and faster for third-party carriers to find and book vehicles, including backhauls in their preferred lanes, a company press release said.
“Haully is more than a technology platform,” said Mark Anderson, president and chief executive officer of United Road. “Haully is about investing in relationships with our third-party carriers. Our goal is to make it easy for our third-party carrier partners to do business with United Road.”
Efforts like these to add capacity and remove time and thus delay from transport logistics should help narrow the gap remarketers and dealers look for to improve their return on investment. The industry may need to continue catch up for some time as consumer-to-consumer, consumer-to- dealer and dealer-to-dealer auction activities continue to put pressure on short-haul, small load haulers.