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Market Trends

Increased Demand Creates Backlogs at Upfitters

September 15, 2014, by Mike Antich - Also by this author

One challenge for the 2014-MY has been the increased volume of fleet vehicles going to upfitters, which has resulted in capacity issues. With the increasing demand and growth of the commercial truck and van segments, particularly among utilities and service industries, the percentage of upfitted vehicles is growing.

“Upfitters are feeling the pressure of increased demand. Huge influxes of vehicles needing upfitting have left some installers overwhelmed at times, and, in a few instances, we have moved trucks from one installer to another to meet delivery expectations,” said Jan Freund, director of manufacturer relations at Wheels Inc.

There have been significant product backlogs at the body companies as they struggle to keep pace with the sharp increase in demand after having dramatically pared back their workforces during the 2008-2010 economic downturn. In addition, some upfitters experienced lead time increases due to supplier constraints, resulting in parts shortages.

“Some ship-thru vehicles had longer lead times as upfitters experienced delays with parts and graphics,” said Candice Groth, factory order and vehicle information center manager at GE Capital Fleet Services. “Certain models with ship-thru upfitting experienced parts challenges where their build time hinges on parts built abroad. The shipping time is continually monitored to better align parts and vehicle arrival timing and keep cycle time in control.”


Missed Ship-Thrus

Order-to-delivery time on large trucks keeps getting longer with upfitters. In fact, some fleets have stopped placing factory orders, and now purchase most of their vehicle chassis from bailment pools, an inventory of already built vehicles on consignment at body companies.

“All manufacturers experienced some logjams at the upfitters. Limited numbers of transportation haulers, rail cars, and truck carriers allow for a limited number of vehicles that can be returned to the transportation hubs. All manufacturers’ provide upfitters weekly status reports, which allow them to plan for incoming inventory and minimize delays. Manufacturers monitor order volumes to best control the flow of large upfit ordering clients during the heavy spring order cycles that challenge the logistics system. This year, upfitter logjams seemed to be tied to the rail-car shortages and winter weather delays,” said Jim Tangney, VP of vehicle acquisitions at Emkay.

As in past years, a shortage of rail cars contributed to OTD delays by causing vehicles to stay in storage until a sufficient number of rail cars arrived. “Vehicle delays at the upfitter caused large groups to arrive at once, creating a backlog for the vendor. Once an upfit is complete, delays also occur when trying to get vehicles back into traffic,” said Elizabeth Kelly, director of operations, vehicle acquisition at LeasePlan USA.  

In addition, this year’s severe weather caused many assembly plants and upfitters to shut down. These shipping delays also caused a backlog of vehicles being held at the body upfitters. “Some upfitters stored hundreds of vehicles while awaiting carrier pick up,” said Freund of Wheels. “The delays can be costly for the customer, because these vehicles are often required for a specific work purpose and are not easily substituted. The OEMs really need to prioritize these vehicles for pick up and return to the upfitter.”

Compounding the problems at the upfitters was the limited number of transportation haulers available to return upfitted vehicles to the OEM distribution system. In some cases, upfitted units awaiting shipment have been held up due to limited space at the assembly plants and carrier delays, according to Freund.

There has also been an increase in the number of vehicles that bypassed the ship-thru upfitters. “When this happens, delivery delays are pretty much guaranteed, since many installs cannot be performed in the field. When field installs can’t be performed, a backhaul is required, which can take several weeks,” said Freund. “I’ve seen some backhauls take more than 30 days.”


Increased Complexity

The upfitting industry is becoming much more complex with trans-border operations, which, in the process, produces “teething” pains. “The Ram ProMaster had substantial delivery delays due to quality holds for this new model, along with the upfit process that was implemented by Chrysler. Vehicles are built in Mexico and the upfit installer’s location is near the plant; however, the upfit suppliers are located in the U.S. Materials have to ship to Mexico and, if the materials are not packaged correctly, they are held at customs, and new parts need to be distributed. Also, since the installer was not completely familiar with the supplier’s installation process, training with the U.S. suppliers was necessary, which also contributed to these delays,” said Cindy Gomez, director of vehicle acquisition services at Donlen.

The challenges faced by the upfitting industry can best be summed up by an industry icon, the late George Frink, who was fond of saying: “And this, too, shall pass.” The solution to these challenges is constant communication with the upfitters, keeping them informed of vehicle production schedules, and helping ensure they meet commitment dates.

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Author Bio

Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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