Bloomberg Business, 3/2:
Too Many Cars and Not Enough Trains Prompts Buffett to Expand Rail Unit
(Bloomberg) -- Railroad companies are struggling to keep up with surging U.S. demand for trucks and sport utility vehicles, frustrating Ford Motor Co. and Toyota Motor Corp. and prompting Warren Buffett to boost investments at his rail unit.
The shortage of rail cars is particularly acute for double-deckers big enough to fit taller trucks and SUVs stacked on top of one another. BNSF Railway Co., owned by Buffett’s Berkshire Hathaway Inc., will buy almost 1,900 this year, more than its combined total purchase of both bi-level and tri-level rail cars during the last two years.
Toyota, whose production system is renowned for avoiding overproduction and inventory build-up, is paving over space at two U.S. plants to park models including the Highlander SUV during times when there aren’t enough rail cars available. Carmakers are finding it harder to get vehicles to dealerships as demand for trucks and SUVs extends the U.S. auto market’s longest expansion since World War II.
“Am I happy with the total allocation of equipment that’s in the pool? No,” Bill Mikkelsen, a manager of North American vehicle logistics at Ford, said by phone. “I don’t think any manufacturer is.”
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