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Increased Demand and Rail Delays Create Upfitter Logjam in MY-2015

September 17, 2015, by Mike Antich - Also by this author

One challenge for both the 2015- and 2014-MY has been the increased volume of fleet vehicles going to upfitters, which has resulted in capacity constraints. 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 upfitters, at times, overwhelmed.

One upfitter issue was the unpredictability of what units were enroute to them. “Due to the rail-car issues of size constraints and shortage, combined with a high demand of work trucks, it created an unpredictable supply of vehicles to the upfitter, at times creating a backlog,” said Nick Erculiani, vice president of vehicle operations for Element Fleet Management.

The rail-car issue not only impacted getting units to upfitters, but, likewise, delayed getting completed units back into the OEMs’ transportation system. “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. 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.

Rail Delays are the Key Culprit

As in past years, a shortage of rail cars contributed to order-to-delivery (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. “The transportation issues also impacted vehicles going ship-thru to the upfitters. We saw delays both in vehicles getting to the upfitter and then trying to get vehicles back into traffic after upfit completion. The demand for upfitted vehicles is also increasing, causing more delays. Additionally, we saw delays coming from the supply chain for upfit components, which was a contributing factor.”

The logistics of coordinating parts arrivals with chassis arrivals was an issue with some upfitters. “Several upfitters faced greater challenges this year trying to manage the arrival of parts to coincide with the chassis arrival in part, due to the fluctuation in OEM production schedules and cancellation of many vehicle orders, said Jessica Krams, manager, vehicle order management for Wheels Inc. “Also, with the introduction of the all-new, redesigned vans, some upfitters were slow to adapt equipment and decals to the many van configurations.”

Upfitter Constraints

The increased volume of units stretched the resources of some upfitters to complete orders on a timely basis. “This occurred with upfitters lacking necessary resources who didn’t have the ability to keep up with the demand,” said Cindy Gomez, director of vehicle acquisition services for Donlen. “This year, we ran into several issues having our vehicles delivered to the upfitters in a timely manner. We had vehicles that were at the ramp for more than 45 days at the manufacturing plant, despite the fact that the upfitter(s) is/are located within a mile from the plant. We have also seen delays in after-market equipment and material being shipped to the upfitters, which have resulted in extended upfit lead times.”   

Here is another example of a miscommunication issue that occurred during MY-2015. “We experienced a major issue with one manufacturer missing the ship-thru code and transporting the vehicles to the courtesy delivery dealer without upfits. Getting these vehicles back to the ship-thru resulted in a significant delay,” said Howard Goldman, vehicle purchasing manager for Merchants Fleet Management. “Coordination of upfit parts continues to be a problem. Some vehicles are also arriving before notification to the upfit and parts are not ordered on time. Communication seems to be the underlying problem here.”

Exacerbating the upfitting constraints were snafus where the wrong vehicles were sent to an upfitter. “We have seen an increase in upfitter-related issues this year that impacted order-to-delivery. Some vendors did not have enough resources, which caused errors to occur. On several occasions, and with multiple vendors, we experienced situations where the wrong materials were ordered and the upfitter did not preassemble items before shipping the vehicles to the dealer. When a dealer is required to install an item, clear instructions are not provided and wrong/missing parts are being shipped,” said Gomez of Donlen. “This has become a pain point this year for FMCs and our customers because once these issues are identified, it can take several days/weeks to resolve, depending on the situation and what materials need to be ordered to resolve the issue.”

Despite these challenges, the upfitter industry was able to work its way through this morass. “Upfitters were also challenged by increased demand, and, like the OEMs, they too had capacity concerns in certain situations. Fortunately, most of them were able to adequately address those concerns. In addition, while there are always generally isolated cases of damages that occur during upfit, or component supply constraints that impact specific projects or vehicles, there were no clear patterns or themes that impacted OTD in a broader sense from an upfitter perspective,” said Partha Ghosh, director – supply chain management for ARI.

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Mike Antich

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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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