AMPORTS new CEO Vee Kachroo has put the 60-year old auto processor on a new route in working with OEMs, railroads, ports and other supply chain partners.
Back in August of 2023, Vee Kachroo was appointed CEO of AMPORTS, a North American auto processor with facilities on the East, West and Gulf coasts of the United States, along with facilities in Mexico.
Kachroo is a comparative outsider to the auto processing business as he spent the bulk of his previous years working in the rail sector, principally with CN rail with which he spent nearly thirty years. For over 26 years, he was vice president of CN’s Industrial Products Division and later president of Supply Chain Solutions.
The rail background along with other industry experiences have shaped Kachroo’s holistic approach to the auto processor business.
In an interview with AJOT, Kachroo offered insight into his business methodology for the Jacksonville-based auto processor.
AMPORTS Footprint
AMPORTS has eight primary terminals in the US. Three are located in the Port of Baltimore, two more in Florida with sites in Jacksonville and Port Everglades, another in Freeport, Texas, and two in California, one in Antioch and the other in Benecia. The auto processor also runs three terminals in Mexico, one on the Pacific coast in Lazaro Cardenas, another facility on the Gulf side at Altamira, and the third in central Mexico at Queretaro.
A key feature of the AMPORT footprint is the ownership of properties and their strategic locations. For example, Freeport, Texas on the Gulf of Mexico is located adjacent to the burgeoning auto market in Texas. But Freeport also provides a location relatively near the Panama Canal gateway and the facilities in Mexico, especially Altamira.
The facilities my seem randomly placed but there is a logic to the distribution. AMPORTS auto processing terminals are strategically spread out (excepting the three located in the US ro/ro hub — the Port of Baltimore) and the two in Northern California. There is a self-supporting mechanism built into their locations. For example, if the Baltimore terminals need to shift vehicles beyond their local facilities, there is the Jacksonville, Florida terminal. And Jacksonville can do the same with the facility located in Port Everglades, south Florida. Equally, the terminal in Freeport, Texas can provide support to Altamira, Mexico on the Gulf Coast side while Lazaro Cardenas on the Pacific coast can support the Benicia and Antioch facilities in Northern California. And the Queretaro facility in central Mexico can support the two coastal facilities.
While most AMPORTS terminals are located in port areas they are also supported by highway and railroad links to each other and their customers — the original equipment manufacturers better known as OEMs.
And coming back to the Baltimore terminals and supply chain resilience. Although many of the ro/ro calls were shifted to other ports, because of the closure of the ship channel following the MV Dali’s allision with the Francis Scott Key Bridge on March 26th, the auto processing in AMPORTS facilities still continued. According to Kachroo, 60% of the vehicles were returned and processed in April and they are expecting that figure to rise to 95% for April. With the channel now open Baltimore’s ro/ro business which annually handles 840,000 units of which roughly half are handled by one of AMPORTS facilities, should return to full operating capacity.
What’s Working on the Railroad
And the auto processor’s railroad links are potentially a “differentiator” from Kachroo’s perspective. Rail transportation is hard to beat for moving vehicles over distance when compared to auto hauling by truck. According to the American Association of Railroads (AAR) in a typical year railroads carry 1.8 million carloads of autos and parts. And as Kachroo pointed out in the interview with the AJOT, there is little comparison between the hauling capacity of a freight train - that can literally haul hundreds of vehicles - to a truck that moves less than a dozen (normally nine). The AAR notes that railroads usually handle around 75% of all the new cars purchased in the US in an average year. And rail is often a near to end-to-end transit, taking up a lion’s share of the surface portion of the supply chain move.
For that reason, Kachroo has placed an emphasis in developing a rail strategy to exploit the inherent advantages that rail brings to the table — volume and speed.
From a mile-high view of the automotive supply chain, the more efficient the utilization of the rail segment, the more efficient the entire supply chain becomes for the OEMs and other supply chain partners. And for AMPORTS the greater the efficiency of the auto supply chain, the greater the volume of vehicles the company’s “footprint” can handle. “We want to make the product more seamless for everybody [in the supply chain],” Kachroo explained.
In a sense Kachroo’s strategy for the auto supply chain is reminiscent of E. Hunter Harrison’s Precision Scheduled Rail (PRS) strategy that he implemented in the1990s at Canadian National (CN) and spread in one form or another to nearly every other Class 1railroad. The PSR business model emphasized “consistent, reliable and predictable” service. A hallmark of that PSR strategy was a robust scheduling component backed up by detailed analytics which is also a critical element of AMPORTS’ approach in redefining its “product”.
And another complimentary wrinkle to the AMPORTS strategy is the development of inland terminals on rail-served routes.
The auto processor already has an inland terminal up and running and plans for more in the future. These new rail-served inland terminals offer an opportunity to leverage the existing terminal network. By being “inland”, they are placed outside the regional port zones that are often congested and where land is at a premium. By establishing inland terminals, AMPORTS not only is creating “new auto processing space” but an ability to service their customers faster and more efficiently raising the productivity of the network itself. This makes the service more reliable and consistent for the OEM customer and for the supply chain partners, whether they are the ro/ro carriers, truckers or other third parties.
Customer Centric
As Kachroo explained this upward leveraging of the entire supply chain fits into the overall concept of being “customer centric”. And many of AMPORTS OEM customers are legendary brand names in the automotive circles. They include nearly all the big automakers like GM, Ford, Toyota, Subaru, Nissan, Mazda, Mitsubishi, Honda, Hyundai and Tesla, just to name a few. Although in general the basic service of auto processing is fairly uniform, within each brand and indeed each type of vehicle are specialized services that contribute to the overall “product”. Perhaps the easiest comparison is that the service demands for an EV like Telsa are very different than that of a Jeep, a Ford 150 or a Cadillac.
EV sales, which despite the current headwinds, are expected to surge over the next decade, according to a recent study by Cox Automotive. And the processing demands of an EV are very different than an ICE (internal combustion engine) vehicle because of the batteries. Auto processors have to adjust for these changes. For example, a quick look at AMPORTS terminal legend (see map) indicates they already have electric charging facilities at four of their auto processing terminals specifically to handle EVs.
The smorgasbord of services all contributes to the “customer centric” service model.
And this feeds into another aspect of the business model: moving “beyond pricing” as Kachroo articulates the concept. When the service delivers the KPIs (Key Performance Indicators) that display better productivity and consistency — in short improves a customers’ bottom line — this service has moved beyond the standard pricing model. The analogy is that the pricing is more like an insurance policy. The service model enables the customer to better weather disruptions and to have more consistent operations and thus a better return than might otherwise be the case.
While this is a different route than other auto processors have traditionally taken, it opens the door to a new approach to auto logistics.
