Posts Tagged ‘auto traffic’

CN Cutting Workforce, Trains During Pandemic

April 3, 2020

Canadian National CEO J.J. Ruest provided a glimpse of how Class 1 railroads are scaling back operations in the wake of a falloff of freight traffic during the COVID-19 pandemic.

CN has furloughed more than a thousand workers and has reduced the number of trains that it operates.

It has closed its yard in Battle Creek, Michigan, because finished vehicle volume has dropped by 50 percent after major automakers closed their plants to prevent the spread of coronavirus.

Speaking during a webcast hosted by Citibank analyst Christian Wetherbee, Ruest said CN carload traffic fell 13 percent with automotive traffic, crude oil shipments, and frac sand in particular showing declines.

CN continues to enjoy strong volumes of Canadian grain, Canadian export coal, propane, and domestic intermodal traffic.

Ruest said overall volume will continue to diminish in the coming weeks as factories close or reduce production and consumers cut their spending.

At the same time, Ruest said CN wants to be ready when traffic returns although he said there is much uncertainty over when that will occur.

CN plans to open a sixth dispatching office, which it calls a rail traffic control center, in order to minimize the risk of COVID-19 affecting operations.

The Montreal-based carrier has had some difficulty purchasing disinfecting products, Ruest said and has turned to making its own disinfectants in shops as well as having employees of its freight forwarding business in China buy disinfectants and send them to North America via air freight.

Chief Financial Officer Ghislain Houle said during the webcast that CN is likely to reduce capital spending this year but will continue with capacity expansion projects scheduled for its main lines to Vancouver and Prince Rupert, British Columbia, where intermodal and coal traffic are expected to rise.

Ford Action Not Expected to Affect Railroads

April 28, 2018

A decision by Ford Motor Company to end production of most sedans in North America is not expected to have a major affect on Class 1 railroads Trains magazine reported.

Ford plans to stop making  the Fusion, Fiesta, Taurus, and C-Max at assembly plants in the United States and Mexico, but will make other vehicles at those factories.

The automaker based in Dearborn, Michigan, said the models being ended sold  315,400 vehicles last year of the 2.03 million vehicles it sold in North America.

Ford plans to focus more on its more profitable sport-utility vehicles and pickup trucks, most notably those in the F series.

Trains said the Taurus is built at the Chicago Assembly Plant served by Norfolk Southern. Ford will begin building the 2020 Lincoln Aviator SUV at the plant.

The C-Max is built at the Michigan Assembly Plant in Wayne, jointly served by NS and CSX Transportation. Ford also produces the Focus at the Michigan plant.

The Fusion, which is the best-selling model being discontinued, is built at an assembly and stamping plant in Hermosillo, Mexico, which is served by Kansas City Southern.

KCS also serves the Cuautitlan Stamping and Assembly Plant in Mexico, which churns out the Fiesta.

After phasing out these models, Ford will build just two cars, the Mustang and the Focus, which will debut as a new crossover dubbed the Focus Active.

U.S. Railroads Expect to Benefit From Increase in Auto Maker Manufacturing Capacity in Mexico

March 10, 2016

With U.S. auto makers seen as likely to increase vehicle production in Mexico and that is likely to be good news for U.S. railroads.

Although many of those vehicles will be built for export markets that do not include the United States and Canada, analysts expect U.S. railroads to see increased traffic in parts used to make vehicles as well as the finished vehicles.

Larry Gross, who is president of his own consulting business, told Trains magazine that a substantial number of the vehicles being built in Mexico are expected to move north by rail.

train image2Railroads also could benefit from hauling parts destined for the Mexican assembly plants.

Although this might seem to be a boost for railroad intermodal business, Gross said the complication is that moving the parts would involve two railroads working together which often do not work well together.

Nonetheless, some agreements have been worked out, including one involving BNSF and Ferromex (Ferrocarril Mexicano, FXE) to move auto parts in containers between Chicago via El Paso, Texas, to an assembly plants near Mexico City at which Volkswagen builds engines and General Motors assembles engines, transmissions and Chevrolet and GMC pickup trucks.

The latest figures, which are from 2014, show that $73.5 billion in exports and imports moved by rail from Mexico to the United States.

Most of this traffic – more than half of which was vehicles and parts – was interchanged at gateways in Nogales, Arizona; Lardeo, Texas; and El Paso.

The statistics show that trucks handled about six times the business handled by railroads.

Trucks are not the only competitor for the railroads. “There is potential competition from ocean movement of vehicles, particularly into the East Coast,” Gross said. “How smoothly rail can flow across the border will be a key factor.”

Mexico is the third largest U.S. trading partner behind China and Canada. Auto production in Mexico began to accelerate after the 1992 adoption of the North American Free Trade Agreement.

Auto analyst Jim Gillette said that auto production in Mexico is expected to soon reach three million vehicles per year.

Auto makers are eyeing markets in South American and Europe for the vehicles they build in Mexico.

The Wall Street Journal recently reported that Ford Motor Company plans to open a new assembly plant in the Mexican state of San Luís Potosí in 2018 that combined with an existing factory near Mexico City would have a production capacity for 500,000 more vehicles annually.

The WSJ report said that three-quarters of Ford’s production would still be in the United States. More than a year ago General Motors said it would double its manufacturing capacity in Mexico.

A wide range of brands, including Fiat, Lincoln and BMW, are built in central Mexico.

Lower labor costs are often cited for moving production south of the border, but U.S. companies have also said that the quality of the work of the Mexican assembly plants has met and sometimes exceeded domestic U.S. quality standards.

A Detroit Free Press report said that despite the increase in production in Mexico about two-thirds of new vehicles built in North America will be assembled in the United States.

The report said that the rise in production in Mexico is expected to come at the expense of auto manufacturing in Canada.