Union Pacific - Autos Market
This year, I decided to take Marketing 490 as a course. The Marketing Department at UNL teamed up with Union Pacific to offer an applied business project class designed to allow students to challenge themselves through real-world business experience to solve problems that Union Pacific is facing. The class, inspired by the television show The Apprentice, is divided into teams to work on each project and present their findings to Union Pacific management. Union Pacific will choose the team with the best analysis and recommendations as the "winner" of each competition.
Having been declared the winner for the second project assigned to us by Union Pacific, I decided to share my team's proposal.
Successful partnerships are achieved when both companies share similar values and have mutuality and synergy in their thinking. Union Pacific has been building the American landscape for over 150 years, which is why partnering with Ford, who invests more in America than any automaker, is a partnership that has stood the test of time. When you’re a part of the American landscape, you protect it. With the electric evolution upon us, Ford is an emerging player who Union Pacific needs to focus their commercial efforts on. Being already built into Ford’s Aligned Business Framework, we think it’s integral to make investments tailored towards Ford to increase their scale and capacity needs.
Union Pacific has been a part of Ford's Aligned Business Framework since 2005. In 2014, Ford and Union Pacific made investments toward tailoring rail cars to fit Ford cars' specifications, having an innovative railcar designed for vehicle shipping that can accommodate the variety of Ford Transit roof heights. The medium and high roof transit vehicles were too tall to fit the standard two-story railcars. Engineers from both Ford and Union Pacific worked together to design a railcar that accommodated the roof-height variations to maximize the number of cars transported.
Initially, Ford had evaluated using trucks only to transport their vehicles. Still, because of Union Pacific's ability to specifically tailor their vehicles to Ford's needs, Union Pacific maintained its spot in Ford's shipping network. We fear that with oil prices lower than ever and Ford restructuring the design of their cars' to match the consumer's preference, Ford might have to reevaluate their Aligned Business Framework to find a new transporter that can best accommodate these vehicles.
In 2012, in the face of a recession, Union Pacific was willing to readjust their operations to match Ford's changing business requirements. By working tirelessly to assist suppliers and minimizing production disruption, Union Pacific demonstrated courage, strength, and leadership during a time of hardship. Now in 2020, as our nation faces unforeseen business challenges and Ford is trying to redesign its business plan to adapt to the market, Union Pacific has the opportunity to support Ford by providing them with the best value for all their transportation needs.
The solution that is being proposed to address the future demand for transporting EV’s is focused on the railcars that will be used to move such vehicles. The reason behind this proposed solution is rooted in the idea that current railcars are not well suited for moving EV’s over long distances. Due to space and charging requirements, railcars will need to be modified to account for the wave of electric vehicles that will need to be moved in the coming years.
The major change that we propose to Union Pacific’s automobile railcars is adding the capability to charge and accommodate electric vehicles. Due to the nature of batteries, they lose charge over time. On long trips across the country, the batter of EV’s will surely lose charge to the point that the battery is drained. What does that leave on the receiving end? A handful of electric cars that cannot be moved off of the railcars, causing major disruption on the supply chain as a waste of time and resources moving “dead” cars off of the railcar and onto their next destination.
This concept will require expert knowledge in the logistics of moving electric vehicles and keeping them charged. With 20 years of EV experience, partnering with Wallenius Wilhelmson would be a strategic alliance. WW had their hands in moving the Toyota Prius, one of the first hybrid vehicles to hit the market. According to the company, vehicles should be sufficiently charged (70% Battery) while being transported (walleniuswilhelmsen.com). Overall the company handles all necessary safety precautions and logistics in the movement of EVs. They would be a great potential alliance to co-create railcars that are tailored to moving electric vehicles. This quote from their website helps demonstrate their work with charging EVs.
While many believe that every vehicle requires its own charging station, the number of charging stations will depend on the customer’s state of charge requirements and the transport mode with which the units were delivered at the terminal. A case in point: Wallenius Wilhelmsen recently moved 30,000 EVs from the Baltimore to Zeebrugge and used four charging stations at the port of load and 20 at the port of delivery. Charging times vary but are generally thought to take between two and four hours per unit.
While it is understood that this has the potential to be a large investment, it also has the potential to put Union Pacific ahead of the curve and in a great position as there is an increasing push for electric vehicles. According to the EPA, electric vehicle sales have grown from just under 200,000 units in 2014 to over 1.2 million units in 2019. This exponential growth hints at a promising future for the EV market (epa.org). That being said, these electric vehicles need to be moved from across the country from destination to destination. We propose that Union Pacific has a great opportunity at hand to enter the market of moving these vehicles and be a leader among the competition.