According to the Global Automotive Executive Survey 2017 published by audit, tax and advisory services provider KPMG, the automotive industry as a whole is currently “lost in translation between evolutionary, revolutionary and disruptive key trends that all need to be managed at the same time.”

The most significant of those “key trends” in the specific context of automotive logistics development in Asia and globally over the next decade include the accelerating advance of new manufacturing technologies, notably battery/fuel cell electric vehicles and self-driving cars; fundamental changes in the structure of global manufacturing operations; the rapid growth of China as a vehicle manufacturing centre; continuing political uncertainty and changing trade policies; and, in the case of aftermarket spare parts and accessories, potentially the emergence of 3D-printing technology.

On the manufacturing technology front, one of the key developments already presenting a significant new challenge when it comes to global automotive logistics is the upsurge in production of battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs).

“BEVs and FCEVs have definitely had a high impact across the board,” says Ilhami Arslanoglu, vice president, automotive, DHL Customer Solutions and Innovation Asia Pacific.

“We have seen the emergence of new OEM (original equipment manufacturer) and technology players in a field typically dominated by traditional stalwarts – and these newer players demonstrate high potential,” he said.

That growing interest in BEVs and FCEVs has brought new supply chain considerations and requirements to the fore. “With BEVs and FCEVs, there are fewer parts involved compared with vehicles using traditional combustion engines; there are new packaging needs for storage and transportation; and we also see a high aftermarket logistics potential for batteries.”

Expanding further on the impact of expanding electric vehicle production, Achim Glass, head of global automotive vertical for Kuehne + Nagel, said one result was a significant demand for space, supply chain solutions and expert knowledge relating to the transport and storage of lithium cells/batteries for both inbound manufacturing processes and aftermarket activities.

“Lithium batteries are dangerous goods and due to the rapidly growing volumes, existing warehouse facilities are often not prepared to provide sufficient or adequate space for these products, for example, strict segregation areas complying with international dangerous goods (DG) regulations. On aircraft, international DG requirements limit the flexibility to transport batteries,” he stated.

“For aftermarket operations, the very demanding transport and storage requirements for used or damaged batteries are a major challenge. Another significant challenge for that market is the non-availability of original packaging for used batteries.”

Kuehne + Nagel’s latest response to those challenges, said Glass, had involved introducing a supply chain service, called KN BatteryChain, covering the entire life cycle of a lithium battery. “That solution was developed in close cooperation with battery manufacturers and automotive OEMs,” he added.

Another result of the increasingly high-tech nature of new vehicles with implications for logistics operations, suggested one observer, was an increasing “blurring of the lines” between the automotive and technology industries.

“What we’re seeing now is that the tech sector and the automotive market are increasingly interlinked – for example, cars that will wirelessly charge your iPhone or Google’s self-driving car project,” said Nikolai Bergmann, global business development director for Chapman Freeborn OBC (on-board courier).

Bergmann pointed out that Chapman Freeborn provides both on-board courier/hand-carry services and air cargo charters to a range of industries. “One of the interesting trends of the last couple of years has been the blurring of the lines between some of those sectors,” he said.

Other broader changes in the global automotive industry and their likely influence on logistics and supply chain operations were identified by Alexandre Lion, regional vertical market manager automotive, Asia Pacific, for Geodis.

“One of the biggest impacts will be a change in the very structure of the automotive industry, as it moves from a pyramidal form to a more collaborative set of joint ventures, agreements and associations between tech companies, automakers, manufacturers, designers, etc,” he suggested.

“Tomorrow, the software that runs fully self-driving cars will capture most of the value and, in parallel, the rise of ride-sharing platforms will challenge the traditional buy and sell model. That will disrupt the entire ecosystem.”

Expanding on that last point, he said the power of decision, value and margin would be further split and shifted to robotics, semiconductors and software. That would have a massive impact in terms of organisation and would make real-time visibility crucial.

“Today, some Tier 1 suppliers and OEMs have started to see themselves as tech companies. In that environment, the supply chain will be connected, collaborative and cost efficient,” says Lion.

The ever-growing impact on international automotive logistics of developments in China was outlined by Paul Huang, managing director, China, for Tigers, a Hong Kong-headquartered supply chain solutions provider. “China was already the largest automotive market in the world and since 2016 has also become the largest car manufacturer,” he said.

“The immediate impact we are feeling in China is the change in our customers (first-tier suppliers to car manufacturers) and a supply chain shift from inbound-dominated, mainly imports from the EU, to outbound-dominated, with worldwide exports from China. Export volumes are three to five times bigger than imports and we expect that trend to keep growing.”

Meanwhile, the development of automotive logistics worldwide will also continue to be influenced by external factors, specifically political uncertainty and changing trade policies.

“Geopolitical factors affect automotive supply chains more than any other industry,” said Antonio Fondevilla, executive vice president, global automotive sector, for CEVA Logistics.

“The global and complex networks which the automotive industry operates in are exposed to a wide spectrum of political events around the world. Trade policies and changes in regulations are adding uncertainty and cost to the complexity of the business and supply chains,” Fondevilla said.

On the more specific issue of 3D printing, logistics executives currently believe that development is most likely to have an impact in the aftermarket sector of the automotive industry.

“Warehousing and inventory of low runners will be significantly reduced if there is a 3D-printing plant nearby the final user. That in turn will give companies the ability to print different parts for a variety of OEMs,” said Fondevilla.

Right now, though, many still see the impact of 3D printing on overall automotive logistics operations as more of a potential challenge for the future rather than one for the present.

“I’m not entirely sure that 3D printing will be as disruptive as people think in the short term,” said Lion. “It will be a slower evolution, as people start to invest in the equipment and assess the availability and cost of materials.”

Summing up the likely key overall requirements for the automotive industry supply chain of the future, Fondevilla said it would need to be “even more transparent and reliable, while also being a reliable data source.”

“More than ever, I see it as a network with key hubs connected worldwide where specifics will be produced/assembled. The key to all of that, though, is undoubtedly transparency,” he said.

By Phil Hastings

Correspondent | London