Freight Focus: Automotive Freight
by Jim Park
The automotive sector is truly the engine of our economy. The folks who pay attention to these things all say "how goes Detroit, then so goes the rest of the land." And it's true. When the automotive industry is booming, so is almost everybody else.
But even Detroit can't make cars simply appear on the assembly lines or the showroom floors. That's where we come in.
One day, not that long ago, some bean counter realized how much money was being tied up in warehoused inventory or inventory sitting somewhere in transit. Once the magnitude of this non-performing capital became clear, the shift away from traditional supply lines occurred almost overnight. And once the shift from warehousing parts prior to assembly to 'just in time' inventory control had begun, there was no stopping it. The only way to ensure that the parts would arrive at the plant on time was to ship them by truck. Trucking became the transport mode of choice for the automotive sector, and since then, our industry has come to play a vital, if not indispensable, role in automotive manufacturing.
The railroads did a fair job in their day, back when bulky items like frames could be stacked 1000 deep on the factory lots. But the trains simply couldn't be relied upon to get small quantities of material to the plants on time. Today, that same stack of frames might be only 50 deep, with the next load arriving at the gate, another load en route, and a third being chained down for the trip.
The automotive manufacturing industry is concentrated around the lower Great Lakes area - once known as the "Rust Belt" due to the decline of heavy industries such as steel-making and large-scale manufacturing. Today, much of that heavy industry has been replaced by smaller, more flexible manufacturing facilities, which rely on careful supply-chain management to deliver their raw materials. While the rust belt remains the core of the automotive industry, the flexibility and reliability of trucking as a means of moving product from the supplier to the end user has encouraged manufacturers to locate their facilities as far from the core as Mexico and the U.S. southeast or midwest. In Canada, the vast majority of automotive-related industry is located somewhere along the Windsor, Ont.-Montreal, Que. corridor, making Ontario Canada's automotive capital.
Timing is All
"The key to successful inventory management is to have the material on site when it's needed," says Mike Gibson of Alliston, Ont.-based Warren Gibson Ltd. "Our customer tells us what is required on a certain date, and it's up to us to get it there." Gibson says that task isn't terribly complicated, in his case, because he generally gets about seven to ten days notice from the customer. From that point, it's a matter of matching the customers needs to his manpower and rolling stock availability.
Gibson says his drivers love the advance notice. "They know, week in and week out, when they'll be working," Gibson said. "The family guys love it because they can make plans around the schedule." There aren't too many other sectors in trucking that offer that kind of predictability. Clearly, for all of the downside to JIT delivery, there can still be a distinctly positive side. But as any driver will tell you, even the best laid plans sometimes fall apart at the last minute.
Simply being there to pick up a load of car seats at a plant in Cleveland, Oh. at 10:00 a.m. Thursday morning is just the tip of the iceberg.
Gibson says that most of his loads are two-way deals. Racks and containers back to the shipper and finished product out and to his customer, which relieves him of a huge amount of stress when it comes to the backhaul. So assuming you've got a load of empties to go down, the next challenge is either weather or Customs. Remember, appointment times are critical.
"Our customers are all on the 'FIRST' system with Canada Customs at the present time, and all the returns are bar-coded for entry into the U.S." Gibson told us. "But still, we experience the occasional glitch." The FIRST system is a protocol that allows 'Frequent Importers' of the same commodity to clear customs with minimal paperwork. Weather, of course, is unpredictable, but whenever possible Gibson takes precautions and dispatches his trucks a little earlier just to avoid complications.
The supplier is also under some pressure to produce the product on time for delivery to the manufacturer, naturally so delays at that stage can compromise the delivery schedule as well. The truck arrives on time for the pick-up but is delayed for two hours, potentially affecting the delivery window. At stake, in cases like this, is the entire car assembly line, and the big automakers don't take kindly to idling the line for lack of parts.
Readers may recall the impact the road blockades had back in the early 1990s. It was the automakers who convinced the government to intervene and clear the bridges so that the parts supply could resume. The line shutdowns were costing them hundreds of thousands of dollars per hour.
Mark Brennen, vice president of sales at Highland Transport, says the big automakers demand that their carriers provide some form of in-cab communication, whether it's a satellite system or a cell phone, and they expect the driver to use it.
"When a delay is beyond the carrier's control, we're not usually held responsible for it," Brennen says. "But the driver is still expected to report the delay so that the receiver can, perhaps, make alternate arrangements. It's not always a big deal."
But if the driver doesn't call...
The service agreements most carriers have with the automakers contain some clause that holds the carrier responsible for avoidable delays. Repeated breakdowns, poor scheduling, enforcement issues, etc., are usually the carrier's responsibility. There may be penalties for the delay time, or the carrier may have to cough up the cost of making the alternate transportation arrangements. If those arrangements require a helicopter to ferry in the parts, so be it. The carrier pays. But the ultimate penalty, according to Brennen, is being cut from the shortlist.
"It's really bad for business when you agree to provide a service, and come up short too many times," he says. "Really bad for business."
Typically, automotive parts haulers don't shackle themselves to as tight a schedule as the 'Emergency Expedite' carriers do, but the linehaul guys don't earn as much money either. Some of the tales from the expedited sector are the stuff of legend, but will look into that in a future issue.
Obviously, the next step for a driver who has just been told his load is going to be a couple of hours late is to call dispatch and pass the buck on up the ladder. Satellite tracking and communication play a large role in this corner of the trucking business. Tracking provides pinpoint, real-time information on the load, or the driver may simply key in the details of the delay and everybody's happy. For the driver, the key is to let somebody else make the next decision after something goes wrong.
For all the good automotive transport might offer a driver in terms of scheduled runs and predictable work cycles, the downside to this business has to be the tight schedules. Predictably, few carriers wanted to discuss this aspect of the business, but the pressure to perform isn't any big secret.
A friend of mine was once the designated convict, that is to say, the safety and compliance manager, of a medium-sized player in the automotive sector. He told me that he often had a bit of housekeeping to do at the end of the week on behalf of the carrier he worked for. "Not major stuff," he adds. "But enough to be concerned about."
He said the travel times used when bidding the contracts don't leave the driver with a lot of discretion when it comes to deciding how bad the weather is. "We used 45 miles per hour as an average speed when pegging delivery times after loading," says my friend. "If you look at any trip recorder on almost any truck, you'll see that the average speeds posted on a 500-mile trip aren't much more than 48 mph." That doesn't leave a lot of room for traffic congestion, weather, or delays of any description.
He always advised his drivers to ask, before they left, about the delivery time window. Sometimes they were as tight as 15 minutes either side of the appointment time. In other cases, the window would offer considerably more latitude.
"We had a 1300-mile run that used to offer us 32 hours travel time. But drivers would show up early, upsetting the customer. So they trimmed the travel time to 28 hours," the safety guy says. "How do you like me now?"
No point, though, in dwelling on the negative. Those are the operational realities. Trucking in the automotive sector, especially on the scheduled runs, offers drivers a measure of predictability seldom found in other markets. And like any other quarter of this business, there's a mix of good and bad. But presumably there's more good than bad because this sector isn't experiencing more severe signs of a manpower shortage than any other.
Depending on your employment history and how reliable you are, these companies might not start you on a dedicated run right away. The price to be paid for a mistake can be frightening, so they have good reason to want you to prove yourself first. That behind you, hauling auto parts generally means staying a bit closer to home, if you live in the southern Great Lakes area, plus shorter runs and decent money - if you can handle the pressure.
So the next time you hear civilians complaining that there are too many trucks on the road, remind them that the work those trucks are doing is what's putting bread on their tables. A highway full of trucks is a clear sign of a robust economy, and the automotive sector is a good indicator of how the rest of the economy is doing. So what's to complain about?