DP World expects growth in its automotive vertical amid increased global demand for vehicles as it pitches solutions to Chinese electric vehicle (EV) makers rethinking their supply chains amid stiffer tariff restrictions in Europe and the United States.

“While the automotive sector already forms a key part of our operations, its contribution is expected to increase significantly in the coming years,” Glen Hilton, the Singapore-based CEO and managing director, Asia Pacific, at DP World, told Asia Cargo News.

“This is largely driven by the rising global demand for cars, particularly in China, where new car sales are forecasted to rise by over 30% by 2030,” he said.

The end-to-end logistics solution provider operates in the auto logistics sector across Europe, North America and Asia Pacific. Its network touches 10% of the global new automotive trade and handles over 2 million car equivalent units (CEUs) annually.

DP World also ships over 30,000 vehicles in containers yearly and transports more than 1,000 cars per month via rail and truck.

Hilton said the shift toward EVs and autonomous vehicles is also transforming the industry. He said that by 2030, EVs are projected to account for up to 50% of global vehicle sales, with autonomous vehicles comprising around 15%.

“These industry shifts are driving the need for more resilient and agile supply chains, and DP World is well-positioned to support this transition,” he said, citing the company’s 19 roll-on roll-off (RoRo) terminals and the capacity to store millions of vehicles globally.

As Chinese EV manufacturers gain prominence, they are also starting to rethink their supply chains amid a shifting geopolitical climate and the imposition of tariffs from some of their major markets.

At the end of 2023, for example, DP World noted that Chinese EV company BYD knocked Tesla off the top spot as the world’s biggest EV maker. It said China is home to more than half of the EVs on the road today.

The home-grown Chinese brand has also rapidly dominated its domestic market, making up over a quarter of the market share.

DP World noted that EV sales in China continue to boom, supported by favourable pricing and government policies. In 2023, over one in three car registrations in the country were for electric cars.

“Building on their domestic success, China’s electric vehicle makers are increasingly looking further afield,” it said in a statement.

The end-to-end logistics company noted that Europe is a crucial market for Chinese EV exports, but increasingly, countries in Latin America and many locations closer to home in South Asia are also emerging as destinations.

“But, with several countries imposing punitive tariffs on Chinese EVs, the supply chain is in flux,” DP World added. “While some companies are exploring nearshoring as a solution, emerging new players are rethinking their logistics play.”

“For many Chinese automakers, the imposition of tariffs by countries such as the US and EU has caused them to rethink strategies. Some are exploring assembly and manufacturing set-ups in Eastern Europe or Latin America. New markets such as North Africa are also emerging as supply chains react to policy implications,” it added.

Hilton told Asia Cargo News that as the world’s largest auto exporter, China’s car exports amounted to US$7.9 billion in July 2024, up 24.8% from the previous year. These exports were mostly directed to Russia, Belgium, Mexico, the United Arab Emirates and the United States.

However, he noted that in terms of growth, the most significant increase in year-on-year exports in July 2024 was seen to Spain, the United Kingdom and Thailand.

“That being said, the uncertainty brought about by shifting geopolitics and tariffs imposed by the United States and European Union has also led Chinese automakers to explore new markets, including Eastern Europe, Latin America, and North Africa,” Hilton added.

DP World said that it has been focused on the automotive industry for some years and continues to adapt its business to these shifting trends as it noted that compared to other types of goods being moved, vehicles are particularly high-value and represent a large amount of capital invested by manufacturers.

“This makes an end-to-end service with a wide geographic reach particularly valuable, especially given the local connections and expertise DP World has in each of its hubs.”

DP World added that by leveraging its global network, it can provide seamless end-to-end solutions across the entire automotive value chain.

Currently, the Emirati multinational logistics company provides a suite of customized and integrated solutions across the entire automotive supply chain, including inbound to manufacturing, complete knockdown, finished vehicle logistics, aftermarket solutions, and EV batteries where it handles 4 million lithium-ion modules annually, with over 20 warehouses custom-built for said batteries.

It also offers a range of solutions, including pure car and truck carriers (PCTCs, for RoRo sea freight), cross-border car carrier trucking and cross-border rail freight options, which significantly improve the manufacturer’s access to landlocked countries.

Hilton said DP World has 93 logistics sites for finished vehicles across the Americas, Europe, Sub-Saharan Africa, GCC and MENAP, the Indian subcontinent, and the Asia Pacific.

“Businesses across all sectors, including automotive, seek increased supply chain resilience, flexibility and visibility. With our integrated, end-to-end supply chain solutions, we provide all of these to our customers, with the added benefit of having a single point of contact and escalation for planning and troubleshooting their supply chain logistics,” he added, noting that DP World also offers a multimodal network.

“When it comes to sea crossings, RoRo currently dominates automotive logistics, but DP World is focused on building cars in containers (CIC) as an alternative option,” Hilton said.

“Currently, the CICs DP World ships per year represent around 20% of cars being handled, and we expect this number to continue growing. For instance, in Asia Pacific, we’re seeing a new generation of EV manufacturers exploring creative supply chain solutions such as CIC and a racking system for wrecks,” he added.

Hilton noted that using container ships increases capacity and availability. CIC is also a more environmentally friendly option because a container ship can carry more cars stacked in containers than a RoRo vessel.

“To continue strengthening this strategy and enhancing our multimodal solutions, we are actively pushing for organic growth and exploring new strategic investment and partnership opportunities for CIC and beyond, including RoRo,” the DP World executive told Asia Cargo News.

By Charlee C. Delavin

Asia Cargo News | Hong Kong