Union Pacific Railroad opened its state-of-the-art intermodal yard here just south of Stockton and just off Interstate Highway 5 late last year.
In summer, heat waves of 100 degree heat bounce off the yard’s white concrete and sear the surrounding San Joaquin Valley pastures and fields. A light, but steady stream of tractors hauling containers and trailers move quickly through the five inbound and five outbound gates, the latest in optimization software orchestrating equipment placement.
Though the yard is in French Camp, Union Pacific prefers to identify the $25 million to $30 million facility in neighboring Lathrop. The most popular color for trailers in the yard is the orange of Schneider National, the new facility’s third-best customer. The top customer for the new yard, and for UP overall for that matter, is American President Lines. The second-biggest customer, New United Motor Manufacturing Inc., the General Motors-Toyota joint venture in Fremont, Calif., is more difficult to identify, because its freight moves in containers carrying the marks of EMP, the container pool UP began last year in concert with Norfolk Southern and Conrail.
But the Lathrop yard is a critical node in a complex NUMMI supply chain that begins with suppliers as far east as New York State, moves through a Chicago consolidation center and ultimately delivers 50 to 65 containers of auto parts per day, five days a week to NUMMI’s plant in Fremont, 60 miles to the south, five days a week. Those same EMP containers move back through Lathrop for Chicago carrying parts for intermediate assembly, collapsed racks and containers that will be reloaded with westbound parts, as well as finished autos moving in Greenbrier Companies’ Autostack racks.
“Lathrop has been a huge improvement for us,” said Eldon Washington, NUMMI’s manager of logistics. “Our freight arrives one day earlier so we’ve taken a day out of our in-transit inventory. Now we’re trying to take one day out of the inventory at Lathrop.”
The NUMMI supply chain that runs through the Lathrop facility illustrates how big changes, such as that yard’s development, can lead to major improvements in a supply chain, as well as the importance of continual efforts at improvement. And it illustrates that even with multimillion-dollar intermodal yards, which handle truck and rail transit, and state-of-the-art software, something as mundane as drayage can be an equally critical link in supply-chain success.
The auto parts that move through Lathrop are only a portion of the parts flowing into the Fremont plant, which this year will produce 360,000 vehicles, including Toyota Corollas, Geo Prizms and a variety of Toyota light trucks.
NUMMI also relies on parts that originate in Japan and the San Francisco Bay Area. Those from Japan arrive via steamship at Oakland and are brought to Fremont by a California drayage company known as Keep on Truckin. Another California trucking firm, Mountain Valley Express, handles milk runs, making pickups at local NUMMI suppliers as many as 26 times a day.
Parts also originate in the Southeast for consolidation in Memphis. Burlington Northern Santa Fe moves 14 or so containers a day from Memphis to the railroad’s Richmond yard on the east side of San Francisco Bay, a dozen miles north of Oakland. As with the NUMMI boxes handled by Union Pacific, Hawk Pacific Corp. deals with all drayage between Richmond and NUMMI.
When NUMMI began operations in 1984, Japanese parts accounted for about 60 percent of the input into vehicles the plant produced. According to Washington, the company has worked hard to increase U.S. input, which he said is “significantly higher” than 50 percent.
Toyota Logistics Services, a Toyota subsidiary, oversees the pickup and delivery to Chicago of parts from NUMMI’s 120 Midwest and Northeast suppliers. Leaseway Transportation, now owned by Penske Corp., does the pickup and delivery to a consolidation center adjacent to Union Pacific’s Global II intermodal yard in Chicago. (Toyota Logistics Services also oversees Ryder milk runs in the Southeast to points as distant as Greenwood, S.C., and La Grange, Ga., that funnel parts into Memphis.)
Washington said that though the Chicago facility “has been with us from the start, it has undergone a metamorphosis from a typical crossdock, reconsolidation center to a system that looks like Toyota’s small lot, frequent delivery.”
As he explained it, because of the distances involved in the Midwest and East, pickups are not made on a true “milk-run” basis, but the consolidation center in Chicago reloads containers to mimic milk runs. Outbound containers are loaded in one of eight configurations, mixing inbound parts to match production needs.
In other words, smaller quantities of identical parts are spread across different containers. Hubs and the parts used in brake systems and drive trains are reloaded to ride in the same container, for example, so parts can be unloaded from each container in a pattern that looks like a small-lot, frequent-delivery system. That system helps NUMMI hold its inventory inside the plant to an eight-hour parts supply and reduces space needed for inventory. But the Chicago center will have only a 24-hour supply at any time.
Toyota Logistics releases 50 to 65 EMP containers to the Union Pacific Tuesday through Saturday. Those containers make up a block scheduled for arrival in Lathrop four days after departing Chicago with availability on the fifth day. When they arrive in Lathrop, NUMMI’s containers are on the head end of a train that will drop a Lathrop block before continuing on into Oakland.
For the first nine years of operation, NUMMI freight moved in piggy-back trailers, before the company decided to take advantage of the economics of empty containers being repositioned to the West Coast. Control availability and backhaul possibilities made the EMP container an attractive alternative when those containers became available last year.
A year ago, NUMMI freight moved through Union Pacific’s yard at the port of Oakland, one-half hour shorter trip to Fremont, but with enough extra time on the railroad to translate into a five-day transit from Chicago. Congestion in Oakland, and a resulting need to get trailers out of the yard, led to surges in trailers arriving in Fremont.
From Lathrop, containers are sequenced into assigned into the NUMMI lineup. Because the contents of containers are going to fall into one of eight loading patterns, Hawk Pacific has some flexibility in delivering containers within the same group. Deliveries, however, are scheduled within four periods over the two shifts NUMMI operates.
“They’re constantly trying to improve the process and that has made UP a better carrier,” said Dennis Van Wagner, president of Hawk Pacific, which has been providing drayage to NUMMI since 1984.
One recent improvement was the elimination of the last deadhead transit between Lathrop and NUMMI’s plant. Because parts are not dispatched from Chicago on Sunday and Monday, none arrive in Lathrop on Thursday and Friday. That gap in the schedule resulted in about five deadhead moves per week.
“Five deadhead moves per week is not a lot considering the number of containers we handle,” said NUMMI’s Washington.
Another recent improvement has been release of some EMP containers for use by intermodal marketing companies with eastbound loads. EMP had been returning about one-quarter of its boxes empty.
Union Pacific reports that it has thus far had little problem supplying 15 or so free-running EMP boxes in Chicago, needed five days a week, to replace those not returned there loaded.
Yet another improvement that NUMMI and its transportation partners are working on is the elimination of what amounts to a day of inventory at Lathrop.
“(Union Pacific) has been 99 percent on time,” said Washington. “We’ve studied exceptions to see whether we would have been able to identify a problem early enough that we can take that day out. We’ll have contingency plans in place to do that.”
