Guest Editorial 5
AUTOMOTIVE LOGISTICS STRUGGLES WITH PRICE
PRESSURES AND CAPACITY CONSTRAINTS
Car makers’ focus on low purchase costs is leading to a shortage of
car-transporting capacity in Europe, according to senior logistics
figures in the automotive industry.
However, this idea was rejected by Kay This lack of representation of logistics
Hanns Ewaldsen, President of the Euro- at the highest level could also explain
pean Car-transport Group, a trade body the disparity between the automotive
made up of 84 European vehicle logis- industry’s enthusiasm for moving produc-
tics companies. Low margins and short tion to China and the picture painted by
contracts would continue to put off anyone logistics experts. “We think most sourcing
thinking of making such investments, he will remain relatively local,” said Jim Moore,
said: “New investors would have to base Vice President of Ryder System, “with most
their investment decisions on profitability components continuing to come from the
and that brings us back to square one.” countries around the production plant.”
To cope with current shortages, the confer- This suggestion was echoed by Christian
ence heard, companies are having to hire Zbylut, Chief Executive Officer of GEFCO:
“When it gets to
additional capacity at high rates in one-off “The increase in distance and complexity,
the stage that your
deals on the spot market. “In the autumn, and the reduction of supply chain reli-
dozens of UK and Irish trucks were being ability, means that purchasing savings can
provider tells you
brought over to Germany for huge amounts easily be offset by supply chain manage-
they’re sorry, but
of money,” said Ewaldsen: “If the car mak- ment costs,” he said. “Our belief is that a
ers spent some of the extra money they’re maximum of 30 per cent content will be
they can’t move your
spending on the spot market on their regu- considered real intercontinental sourcing.”
lar logistics contracts, it would encourage
vehicles, maybe then
investment in low cost capacity.” Moore agreed, saying that raised logistics
your sales department
costs would undermine the advantages of
Svein Steimler, President of shipping line sourcing cheaper components: “There’s
will talk to your
NYK Line (Europe) RoRo Ltd, addressed car always a competitive tension between
logistics department.”
makers, suggesting that a stoppage might [component] sourcing and logistics sourc-
be the only thing that would make them wake ing,” he said. “For instance,” he highlight-
up to the problem. “When it gets to the stage ed, “It can cost more for inland transport
Svein Steimler
that your provider tells you they’re sorry, from the factory to the port in China than
but they can’t move your vehicles, maybe the cost of shipping from China to the US.”
then your sales department will talk to your
logistics department,” he said. These views contradict what car makers
think will happen, however. Supply chain
S
peaking at the Automotive Logistics The problem, many delegates felt, is that management software maker, i2, conduct-
Europe conference in Switzerland, car makers do not have logistics people ed a survey of car makers’ attitudes. Cary
a senior finished vehicle transport involved at a high enough level in the Van Den Avond, Vice President of the Auto-
manager from a major European car decision making process. Michael Proffitt, motive, Aerospace and Defence, Industrial
maker said the number of specialized CEO of the Dubai Logistics City project and Metals division said: “We conducted
wagons and trucks for carrying cars is and former board member of DHL/Danzas a study with OEM customers about where
falling at a time when car production said: “Too many companies do not have they thought things were going. They said
is rising. New operators will enter the the supply chain represented at board they expected three times as much content
market if existing logistics providers level. And it’s fundamental to everyone’s to be sourced from low-cost economies in
don’t invest in capacity, he warned. business. Everyone’s.” the next 5 years.”
June 2007 Supply Chain Europe
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