U.S. Auto Assemblies Unexpectedly Surge Back to 2007 Levels, Creating a Shortage of Rail Cars

The Federal Reserve reported recently that U.S. motor vehicle assemblies totaled 10.7 million units in May (seasonally adjusted at an annual rate), the highest monthly production level since August 2007, almost five years ago before the Great Recession, and almost three times the recessionary low of 3.7 million units in January 2009.  At the current rate of  monthly increases, motor vehicle assemblies will be above 11 million units within a few months, and back up to 12 million units by the end of this year. The recent, and somewhat unexpected, surge in U.S. auto production to pre-recession levels so quickly in the last year has brought about a new problem - a shortage of rail cars used to transport cars and light trucks from assembly plants to dealerships, as Automotive News is reporting:"As of May 18 , daily inventories of vehicles awaiting shipment totaled 81,470 units -- well above the standard daily inventory of 69,000 vehicles, according to a report from TTX Co., a Chicago firm that coordinates rail shipments of vehicles for the railroad industry.Auto executives fear rising North American vehicle production could trigger chronic -- and serious -- transport bottlenecks. "It's a nightmare right now," said Mike Nelson, Toyota Motor Corp.'s national manager of rail strategy and operations.  The rail-car shortage is especially bad for assembly plants in the Midwest, and somewhat less serious for West Coast ports that handle shipments of Asia-built vehicles. The delays will be tough to fix because automakers require special rail cars, called autoracks, to transport vehicles. Bi-level autoracks carry 10 full-sized SUVs and pickups, while tri-level autoracks hold 14 cars.The railroads have a shortage of tri-level autoracks, now that cars are once again outselling trucks. But railroads need time to build these transports, and forecasters did not expect North American auto production to recover so quickly after the recession."HT: Unknown