Logistics must be ready to react to decline and disruption
The fifth straight year of falling sales, and the first significant drop in production, will have significant impact across the wider continent. Christopher Ludwig of Finished Vehicle Logistics reports from thie 2012 Conference
|SUMMARY: The impact of the eurozone crisis on new vehicle sales was in full evidence when the logistics provider community met OEMs and policymakers last week. With 2012 new passenger car registrations on pace to decline for the fifth straight year, to a low of 12.5m vehicles, and with no immediate economic recovery in sight, the talk was of yet more efficiency savings needed. |
For some elements, like trailer manufacturers, it was talk of survival.
Presentations, interaction and social engagement were all included for delegates
“With no sales growth expected for 2013, we hope to have reached the bottom,” said Jan Maly, director of automotive consulting for PricewaterhouseCoopers (PwC). “However, that depends very much on the stability of the eurozone and increases in consumer confidence. We currently do not see EU sales recovering to the 2007 high of 16m units before 2018.
The chronic decline was at the centre of discussions among the 200 plus delegates over the pre-conference business dinner, and during an intensive day of presentations, discussions and networking at this year’s annual ECG Conference, held in Prague, in the Czech Republic. The delegate fee included it all, as well as the opportunity to take in the social programme during the conference and on the Saturday morning afterwards.
Production decline is general across Western Europe but most acute in the south, and is raising important questions about the finished vehicle logistics sector’s ability to invest in new equipment, technology and services in a European automotive industry that is changing quickly.
Geographic shifts in production and consumption, and the rise of new methods of car ownership and sales, make this “the most disruptive period to the automotive industry that we have ever seen,” said Ben Waller, senior researcher at the retail and distribution consultancy ICDP.
ECG’s Baldissara: coming out hard against government austerity
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The president of the Association of European Vehicle Logistics (ECG), Costantino Baldissara, and its vice-president, Wolfgang Göbel, cited ongoing consolidation, mergers and bankruptcies in the vehicle logistics sector. Small truck operators in southern Europe, for example, are among the hardest hit so far. “In Italy, the small family-owned companies or owner operators – what we call padroncini – are disappearing,” said Baldissara, who is also commercial and logistics director for Italy’s Grimaldi Group.
There are also changes among medium and large providers, with no better signal for this than PSA Peugeot-Citroën’s current plans to sell a majority stake in its logistics provider, GEFCO, to Russia’s state railway operator, RZD. Even before this, companies such as GEFCO and fellow French provider, Groupe CAT, had been acquiring smaller or weaker vehicle logistics companies.
“We’re beginning to see consolidation among European vehicle logistics providers, and there will certainly be more,” said Göbel, although he admitted that many of the ECG’s members, even in hard-hit markets such as Spain, had been remarkably resilient.
Göbel also pointed to the struggles among car carrier trailer manufacturers, who continue to survive despite a nearly complete freeze on trailer investments in Europe. “These manufacturers, like other companies in this sector, are family owned and thus are not shareholder driven. It makes them more resilient. However, they cannot go much longer like this,” added Göbel, who is also director of marketing and logistics at Horst Mosolf.
Coming together for downstream benefits
Citing devastating macro-economic conditions, Baldissara said the renewed crisis was “well above anything that could be done by LSPs or OEMs”. He came out hard against government austerity measures.
“I’m just a simple guy from Naples but it seems wrong to cut back when the market is already in recession,” he said.
He called instead for a European-wide effort to stimulate the sector, including measures such as tax breaks for car manufacturers and consumers, and the encouragement of alliances to help maintain or bring more production to Europe. Baldissara also renewed a call for scrappage incentives that should be tied more strictly to the exchange of older vehicles. Despite the political difficulty of such a move, Baldissara and Göbel suggested that the VAT revenue and jobs growth that such schemes would bring could make them at least tax neutral for European governments.
“In parts of Europe right now the markets have dropped so low that if we don’t do something to help, [the industry there] won’t come back,” Baldissara said.
Delegates at the conference shared an overriding sense that the only viable way to deal with the downturn would be through a unified approach, including at the European level by co-operation between government and industry, as well as between OEMs and logistics providers.
|While vehicle logistics operators can do little to influence the bigger economic picture, there are positive signs that co-operation within vehicle logistics has increased, particularly via the working group of ACEA, the European carmaker’s association, and the ECG. |
“We believe downstream co-operation can provide benefits for both sides,” said Egon Christ, Daimler’s senior manager of worldwide transportation, who also spoke at the conference on behalf of the ACEA automotive logistics working group. ACEA contains 16 OEMs, including all the big Europe-based names except Honda.
“[ACEA and ECG working together means] we now speak together with one voice to lift the potential for downstream benefits,” said Christ.
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Gobel (left) from ECG and Christ from ACEA: speaking with one voice to lift downstream benefits
Growth now all that counts in Brussels
Hedberg from European Commission: Brussels is a ‘one issue’ town focussed on growth
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Delegates also heard how economic troubles are leading to reforms in the European legislative environment for transport, in a way that could have significant impacts for providers’ efficiency and cost base. Kristian Hedberg, head of unit of land transport policy within the mobility and transport section of the European Commission, reported that Brussels had in many ways become a “one issue town”, with the renewal of growth dominating policy decisions.
2013 is shaping up to be “the year of land transport,” said Hedberg, as the commission reviews policies ranging from the design of truck cabs, to the weights and measures allowed for trucking, and the easing of restrictions on cabotage (the rules which restrict trucking companies from operating in foreign markets).
He also suggested that road charging schemes were likely to become more important as Europe looked for ways to bridge its funding gaps and maintain investment in transport infrastructure.
1. Capacity conundrums and collaboration
ECG president Baldissara framed a large amount of the current concerns as being well beyond the scope of ECG and its members, or even its customers. Echoing to some degree Fiat CEO and current ACEA president Sergio Marchionne, he worried that Europe is missing a unified industrial policy to deal with overcapacity and market decline. “We [in Europe] have all the resources to deal with this crisis ourselves, and we have all the skills and technology we need to continue to build and export vehicles.”
OEMs attending included (from left): Volvo Cars head of outbound strategy Magnus Odling; Honda Europe head of logistics Simon Stacy; BYD Europe’s business development director Chen Yongping; Jaguar Land Rover distribution manager Gareth Williams
Though many believe that the only viable path for the industry is to close under-used plants, Baldissara suggested instead that, with the right help from government, Europe could be as competitive again as the US, and bring volume back to under-utilised plants in markets such as Spain or Italy. He cited Daimler’s recent decision to use contract manufacturer Valmet to build A-class vehicles in Finland as an example of how complex the capacity issue really is.
According to Ben Waller, senior researcher at ICDP, there is no serious consideration in Europe right now to reintroduce scrappage schemes, though there may be the possible exception of France.
An industry speaking with one voice
In the wake of the 2008-09 crisis there were ruptures in relations between OEMs and providers as most carmakers unilaterally ripped up previous contracts or lowered freight rates. ECG vice president Göbel claimed that carmakers had moved away from such approaches as the market heads down again. “OEMs are done with rate cuts,” he told delegates.“They all did it during the last crisis, and most have realised that it won’t work anymore. Any further reduction would drive more providers out of business.”
The conference gave evidence of efforts from carmakers and providers to work in step. Daimler’s Christ, together with Göbel, presented the progress of the joint working group, which meets around three times per year and has between 5-10 companies represented across ACEA and ECG. Discussions are restricted to non-competitive issues, of course, which means that contracts or price are strictly off the table. Sometimes that is irksome: “A joint agreement on a standard fuel clause would improve things for everyone,” said Göbel. “But the legal advice is very firm – we can’t do it.”
Progress has been made on standards, however, with ACEA now adopting ECG’s operations manuals for passenger cars and light commercial vehicles, extending the number of OEMs that use them from around five to 12. Christ said that ACEA will also adopt ECG manuals for non-standard vehicles.
Joint studies are being undertaken to analyse why and where empty mileage occurs, and the groups have also agreed to form a common approach for dealing with driver shortages.
But there is ongoing criticism from OEMs about a lack of innovation in the vehicle logistics sector. Christ told delegates: “If you look at other industries, including OEMs themselves, innovation is necessary to survive. We have to develop new products often and quickly to stay ahead in the market, but this is not something that I have seen enough of in vehicle logistics.” As part of its response, the ECG is adding a module on promoting innovation to its annual Academy programme, which provides a qualification in vehicle logistics management.
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TES managing director Willem de Lange: at the conference to do business among OEMs and LSPs
2. Europe missing out on global growth
As former President Bill Clinton said: “It’s the economy, stupid.” And the short-term outlook for the European market remains poor, with sales not expected to rise before 2014, according to PwC. Further declines are not ruled out, particularly if there are further shocks to the eurozone.
In recent years European production had remained fairly strong even as local sales dropped, with markets such as China driving exports, especially from Germany. But PwC’s Maly said that slower global growth, together with the construction of foreign production facilities in Europe, has pushed production into closer alignment with European sales for 2012.
Maly of PwC consultants: 2018 before Europe returns to pre-crisis levels of production
| ||He predicts that light vehicle production will be about 1.27m units lower this year compared to last, to leave volumes below 16m units. No growth is forecast for 2013, though PwC does expect production to climb again after that, reaching pre-crisis levels above 18m units per annum by 2018. |
Maly predicted that eurozone GDP growth between 2014 and 2018 would be 1.5% per year, about half the global average. For light vehicle production, PwC expects global volume to increase at an annual rate of 5.1% between 2011-18 to reach 106m unit. However, some 83% of that growth is forecast to be in emerging markets, with Asia Pacific representing 60% of it. The EU is expected to capture just 5.3% of the growth while Eastern Europe, including Russia, would gain 6.5%.
A return to rising inventory levels
The European automotive industry generally is adjusting its production and stock levels more quickly this time round, according to Waller at ICDP. “OEMs have been quicker to slow production or even to temporarily close factories in response to demand, something that had been almost unthinkable a few years ago,” he said. Indeed, as the conference closed, Volvo announced that it was closing its main plant in Sweden for a week because of poor demand.
|Waller warned against a return to a false market, with vehicle stocks recently climbing and his belief that “forced wholesaling” of vehicles to dealers is going on in some markets, such as the UK. He also noted the practice in Germany whereby OEMs purchase a share of their own vehicles. |
Jean-Marie Souvestre, group commercial director for STVA, described “woeful” planning information which still had national sales networks sticking to 2012 annual projections developed earlier this year or in 2011, despite the fact that for them to be true would mean a near 40% increase in volume in the last few months of the year – clearly absurd in current market conditions.
The distortions of end-month deliveries is also a factor obscuring the bigger picture, said Konrad Zwirner, senior vice-president of road transport company Hödlmayr International.
In some cases production distortions appeared to be driven by dealers as well. Stefan Nilsson, shipping manager for the EMEA region for Volvo Construction Equipment, said that his company was now compelling dealers to provide retail reports so that that their sales projections could have a “sanity check”. He noted cases where dealers would call for production when their pipeline had been revealed to be full.
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STVA’s Souvestre with SEAT vehicle distribution manager Medina
Dire market for road transporters
Percht from Kassbohrer (left) with Toyota's Vanderhaeghen: trailer sales 85% down
| ||One of the most forceful examples of the difficulties faced in parts of the outbound supply chain was revealed in reports from the specialist manufacturers of car carrier transporters. According to Gunther Percht of Kässbohrer Transport Technik, volume continues to be down 85% on the levels reached in 2008. |
“We’re used to volatility, but this is of a different order,” he told delegates.
Current sales levels are just 40% of normal replacement levels (which he put at between 2,400-3,000 units per annum), with almost nil investment in new carriers. Executives from Rolfo and Lohr, the other two principal providers to the European market, echoed his description. All three are family-owned companies, whose continuing commitment to the market was acknowledged by providers.
Percht told delegates: “We are selling against the banks [which are disposing of vehicle returned from leases], not our competitor.”
|Alberto Picco, sales director of Rolfo, put it starkly: “Guys, we don’t know how long we can remain with this investment in the market. Our plants are dead. Tell us, can you order some machines?” |
Go north and east
Current market changes reflect larger trends towards production and export growth in north European economies at the expense of the south, as well as shifts from west Europe to new EU member states in central and east Europe. One of the major challenges for the logistics sector has been that neither the OEM pain nor success in Europe has been distributed evenly by country or by brand.
Robert Lohr discusses the market with rival Dario Rolfo: tough times for family businesses
For example, PwC reports that German light vehicle production remains fairly stable, but there have been big drops in France and Italy. Capacity utilisation is currently more than 80% in Germany, the UK and in the newer EU member states in eastern Europe, but close to 60% in Spain, Portugal and France and below 50% in Italy.
Meanwhile production is seeing a movement to eastern Europe locations and, as has been well reported, a handful of brands emerging as winners since the downturn in 2008, notably the VW group and Hyundai/Kia.
Production in three core markets
|million units ||2012 (fcst) ||change since 2005 |
|Germany ||5.4 ||+0.2 |
|France ||1.9 ||(1.6) |
|Italy ||0.6 ||(0.4) |
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Production going east: Czech Republic, Slovakia, Hungary, Poland, Romania
|2004 || 1.6 m units ||9% of EU production |
|2008 ||3.1 m ||18% |
|2012 (fcst) ||3.2 m ||20% |
|2016 ||3.7 m ||20% || || |
Europe light vehicle production by OEM 2008-12
| VW Group || +500K units |
| Hyundai-Kia || + 300K |
| BMW || +100K |
| Fiat || more than (500K) |
| PSA || more than (500K) |
| Opel || more than (500K) |
| Ford || more than (500K) || |
3. Changing vehicle logistics flows
Among the most pronounced impacts of market shifts has been an increasing imbalance between vehicle logistics flows for imports and exports. In Spain, for example, exports now outnumber imports by around 3:1 and maybe more, according to Manuel Medina, vehicle distribution manager for SEAT. In 2008, the ratio was better than 1.5:1.
Medina: SEAT has made a big shift away from rail
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SEAT has dramatically changed its distribution flows and network as a consequence. This has been a shift in transport modes and distribution groupings; one logistics provider was previously used to serve a specific flow or country, but SEAT now has a varied supplier base.
There has been a significant shift to more truck and sea transport, with rail’s share dropping dramatically. This has been driven by increased exports to Germany and the UK, plus China, and lower sales in southern Europe.
Not including the shuttle from SEAT’s Martorell plant to the port of Barcelona, rail’s share of Seat distribution had been consistently between 27-29% up to 2009, before dropping to less than 15% in 2011 and now less than 7% this year. Rail’s share of exports from Spain, once more than 20%, is now around 3%, according to Medina.
Sea transport, previously around 30%, has now reached more than 47% for SEAT, while truck has grown a little from 40% of volume in 2008 to around 45% today.
Rail suffers as inventory and lead times rise
A stronger focus on cost over lead times is another reason for these changes. According to Medina, SEAT now accepts increased lead times and more transhipments if the costs are lower, something which had not been a priority before. The difference in track gauge between Spain and the rest of Europe continues to require cost and time to change equipment.
However, the shift towards more sea has led SEAT to nearly double the vehicle inventory held at Barcelona, to around 7,000 units. “This has come at a high cost for us, and dealing with that is currently our fight,” he said.
SEAT’s changes are a part of the VW Group’s review of its logistics strategy. See the report in Finished Vehicle Logistics.
But like much else in the currently divided European economy and automotive market, the experience of one market or company cannot be generalised across the sector. Mosolf’s Göbel noted a dramatic increase in rail transport for some flows, notably for vehicles produced for export. About 85% of Daimler production out of Hungary, for example, is sent using rail. Mosolf is also moving a significant share of production out of Daimler’s plant in Sindelfingen by rail to Bremerhaven. Even though these rail cars come back empty, it is still viable, said Göbel.
Can outbound react fast enough?
OEMs are not always able to align their order-to-delivery systems quickly, particularly when they have a complex network of plants and markets to serve. In a frank comment during the conference session dedicated to the whole issue of the volatility that affects finished vehicle logistics, Toyota’s general manager of vehicle logistics for Europe, Cyran Vanderhaeghen, told delegates “we still have internal issues to address”.
|“Our manufacturing and sales operations are on much better speaking terms [than they used to be],” he said. “But logistics is still not present. We have to put ourselves into the equation internally. We need more planning, not to overcome market volatility – you can’t do that – but to provide more information so we can respond to changes.” |
Vanderhaeghen also cited production-led factors that increase volatility. In Toyota’s drive for efficiency, factories swapped models and production, including changing production location in response to sales that have been made. All of this leaves outbound logistics “in the middle,” he said.
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Volatility is sometimes caused by internal factors: (from left) Toyota’s Vanderhaeghen, Daimler’s Christ and Nilsson from Volvo Construction
Vanderhaeghen’s internal focus was echoed by Daimler’s Christ, who identified market movements as just one factor in volatility. Others include complex supply chains and global versus regional production.
Nilsson: fired up to make money in the downturn
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Volvo Construction Equipment’s Nilsson provided an example of an OEM that has responded well to increased volatility. Noting that sales revenues in 2006, which were on a rising trend, produced profits, but that the same level of sales in 2009 on a falling trend led to losses, he told delegates: “We didn’t react quickly enough to the downturn. Now we’re fired up to that transition, so that next time [a downturn happens] we should still be making money.”
The company shipped 84,900 machines in 2011, for a turnover of some €7.7 billion and a 10% profit margin. Now investments are made with much clearer scale-down – or even exit – plans, said Nilsson.
Also, part of the plans for ramping up production in response to demand is having third parties lined up to outsource when needed.
A more systematic approach in Volvo Construction Equipment’s partnership with its logistics providers is also used, although Nilsson did acknowledge that sometimes this does hamper their creativity.
A report on Toyota Motor Europe’s wider logistics strategy is published in the current issue of Automotive Logistics
4. Potential changes to European transport policy
The conference revealed potentially significant changes to EU transport policy on road vehicle lengths and cabotage.
A revision to the weights and measures directive, which is expected either at the end of this year or early next, could pave the way for the use of longer and heavier trucking equipment within member states as well as when crossing borders. The European Commission has already lifted cross-border restrictions on the use of the European Modular System – trucks with a length of 25.5 metres – between countries that have allowed their use.
Harmonisation of minimum allowable loading lengths in the EU has long been an issue, with limits currently varying from 18.75 metres in Greece or parts of east Europe to 25.25 metres in Scandinavia. ECG has recommended a minimum of 20.75 metres, which would increase load factors without requiring any change to current equipment or infrastructure.
Changes to cabotage rules could help reduce empty mileage by allowing foreign trucking companies to operate longer in different markets, potentially capturing more volume for return loads. “It is a complicated issue,” Hedberg told delegates, “but doing nothing is not an option.”
In fact the European Commission’s vice-president for transport, Siim Kallas, wants to deregulate cabotage altogether. But the Commission has been more cautious due to the potential social, economic and political implications.
Hedberg was hesitant to commit publicly, but said that changes could include extending the lifetime of cabotage operations from seven days to as much as several months or even half a year. Other options are to lift restrictions but to subject foreign operators to local labour laws. Hedberg also pointed to stricter enforcement of cabotage rules through the use of digital and satellite-connected tachographs to monitor truck movements in foreign countries.
Transport policy remains a thorny issue in European vehicle logistics. Ray MacDowall, managing director of the UK-based ECM (Vehicle Delivery Service), pointed to the many challenges of delivering in urban areas, including congestion zone pricing, low emission areas and restrictions of deliveries and even truck sizes in certain European cities.
Tom Antonissen, EU affairs manager for the ECG, raised a thorny issue for trucks moving into Germany, where customs authorities have been fining operators using ‘non-standard fuel tanks’ on trucks on the basis that they are importing fuel and are subject to excise duties. The tanks are installed by specialised trailer manufacturers rather than by the original truck manufacturer, whose unit would be acceptable.
Antonissen reported that the EC has found German customs to be legally in the right. So the ECG is now attempting to develop a short-term fix by asking OEMs to update their online database of models, or by contacting the German authorities directly. But a long-term change in the law could take years.
5. Better news on Europe’s borders
Turkey moves into Europe’s top 5
Delegates were given an insight into markets on the edge of and outside Europe, in a session on the global perspective, which included reports from Turkey and Russia, and a brief summary of India.
While exports from Turkey to Europe have recently declined, the Turkish domestic market situation is good, and the outlook is positive, according to the supply chain director of Tofas Fiat, Altan Aytac. He said that Turkey is about to overtake Spain as the 5th biggest market in Europe with forecast sales of 1.4m units (including commercial vehicles) this year. Production has been between 1m-1.2m vehicles every year since 2006 except for the downturn year of 2009.
Tofas, the biggest producer in Turkey, builds for PSA and (since 2011) for Opel as well as Fiat, on three shifts. Its plant, like those of Ford, Honda, Hyundai, Isuzu and Toyota in Turkey, is in the western Marmara region, closest to continental Europe, but much of the country’s economic growth is occurring in the east.
The finished vehicle logistics challenges this presents include the absence of rail, and the long road trips with no backhaul. Other challenges in Turkey include a market strongly skewed towards sales in the last few months of the year, which means that the country’s 2,000 road transporters cannot cope during the peak but are severely under-used in the early months of the year.
Nevertheless, the general climate for logistics in the country is improving, said Aytac. Government investment is at last arriving for rail, and Turkey’s ranking on the World Bank’s annual Logistics Performance Index has steadily improved, moving from 39th in the 2010 report to 27th this year.
The development of logistics in the Turkish automotive market is covered in the latest issue of Automotive Logistics.
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Ilhan Cetinkaya from Ilce Transportation: reminding delegates about Turkey
A changing Russian market
In Russia the market is booming, with a forecast annual increase of 15% to 3.2m light vehicle sales in 2012. Decree 166 is driving local production, and though the country’s recent accession to the World Trade Organisation reduces tariff barriers to imports, it is being circumvented by the introduction of a scrapping charge on them.
|All this means that the country’s logistics sector is growing, with rail in particular enjoying a “second birth”, according to Kirill Petrunkin, chief executive of provider Autotechnoimport. He noted that domestic production of foreign brands has doubled between 2008 and 2012 to 1.2m units, on a total market of similar size for both years. This has been at the expense of imports, reducing by 500,000 units to 1m, and a steady loss of market share by domestic OEMs. |
Well-known constraints on road transport, which needs double the level of current government investment according to a study by Goldman Sachs, include the annual weight-limit introduced during the spring thaw in April. This year it meant that car transporters could not move even if empty, because they exceeded the 5-tonne allowance.
The ECG has written to President Vladimir Putin and the Russian authorities to urge relaxation of the limit in future. “[It was] a letter I delivered myself to his office, though I don’t know if he read it,” joked Petrunkin.
Other government restrictions follow from disputes with Poland, so that car deliveries from Germany must by carried all the way by either Russian or German transporters, with no use of Polish trailers in between.
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Letter to Putin: delivered by Petrunkin
Read about the implications for Russia’s WTO membership and the wider Russian automotive logistics market.
Mosolf’s Göbel treated delegates to a colourful account of logistics conditions in India, in which price dominates and rules on things like maximum trailer length are freely broken by local LSPs.
Read more in Finished Vehicle Logistics about vehicle logistics and yard management challenges in India. See also the upcoming Automotive Logistics India conference in Pune.
6. Future trends
The final session of the conference looked at what the future shape of the European vehicle logistics industry might be. ICDP’s Waller pointed to markedly declining car use in Western Europe, and the rise of car-sharing schemes in many cities, as signs that the entire ownership model of vehicles could change. In future, vehicle logistics companies might deliver substantially more to fleet customers as well as have more involvement in remarketing and de-fleeting, he said.
The transformation of the car into a channel for connectivity – including internet with social media – could also have implications for vehicle logistics, according to Waller. The inclusion of technology within the car which might change new vehicle tracking is an example.
The EC’s Hedberg warned that significantly more investment in transport infrastructure is needed to maintain for Europe to retain its competitive position. He pointed to a recent German government study that said the country had underinvested in its infrastructure by up to €50 billion.
|“If Germany, typically considered to have the best infrastructure in Europe, has lacked this much investment, other member states must surely take note,” he said. |
Meeting the costs of such investment across Europe will be increasingly difficult given current debt and economic woes. Furthermore, if car transport shifts towards hybrid or electric, as the EC expects, than countries would lose a source of financing from taxes on fuel.
Hedberg pointed to road pricing as the answer. “Transport users, whether trucking companies or passenger car drivers, will increasingly be called on to pay for the use of infrastructure, in the same way that we pay for telecommunications or electricity networks,” he said.
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EC’s Hedberg (left) with Joannes van Osta, head of logistics for JCB
‘Trickle down’ innovation
In a contrasting view from outside of automotive, Björn Klippel, managing founder of TIM Consult, a consultancy working directly for shippers (which does however do work on automotive inbound and outbound) said that vehicle logistics companies currently operate in a “traditional” way, and thought practices used by other industries should “trickle down”.
Among these are the de-coupling of tractor units of cab and driver from the trailer. He pointed to intermodal equipment where a container can be shifted between ships, rail or road equipment, enabling modal and routing efficiencies without the limitations of driver shortage. “The use of such flexible equipment for outbound [vehicle] logistics is a big opportunity,” he said.
Klippel also pointed to the increased distances when production is in the east, and consumers are in the west, as favouring rail and short sea, despite their lesser flexibility. He predicted that equipment and operational methods to decrease empty miles would become even more important in future, a point also made by Waller when he said that market volatility puts pressure on carmakers and logistics providers to consolidate volumes.
Invest, innovate or lose market opportunities
Both Waller and Klippel echoed Daimler’s Christ by highlighting the dangers when suppliers fail to invest or innovate. Klippel warned that carmakers themselves might invest. “If no service appear, shippers could move into horizontal collaboration, where they might become operators themselves to some extent,” he said. “We’ve already seen that in some cases.”
Noting the move the other way by GM, Klippel felt that its deal with GEFCO cannot be applied generally.
GEFCO director Antoine Redier (right), now in
charge of the GM deal, talks with Toyota’s general manager of vehicle logistics Cyran Vanderhaeghen
| ||Overall, “I don’t see the vehicle logistics industry moving towards 4PL or asset-light operators,” said Klippel, “ since it would depend on their ability to guarantee the service and to improve on already very thin margins. Other industries are actually moving back towards asset-owning models, in fact.” |
However, the importance of investment in equipment, innovative new services and technology raises questions about whether current economic conditions might prevent providers investing further.
As Klippel pointed out, recent advances in the sector have come when larger companies made investments in services that were previously considered inadequate, such as GEFCO, BLG and Mosolf in rail distribution.
Are there any logistics providers willing now to make such moves? “Who is currently planning for the upturn?” asked Waller. “Where will the investment actually come from?”
The message from this year’s ECG Conference is that it’s a question that will remain unanswered until the region as a whole sees a way towards economic stability and growth.
(back to top)Value for each delegate
|1) Networking Opportunities |
Careful scheduling allows interaction between customers and suppliers at:
- introductory cocktails
- coffee breaks
- networking lunches
- informal meetings within the conference area
- the pre-conference business dinner
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A unique and high-level gathering of senior executives and analysts provides:
- formal speaker presentations
- a discussion sessions
- break-out workshops
- soft copies of the speaker presentations after the conference.
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3) Business and Social environment
We recognize the all-important personal dimension to any business relationship, so the event provides a relaxed environment for the mid-conference Gala dinner and the pre-conference cocktail reception.
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In summary, delegates at ECG 2012:
- Heard great presentations from OEMs, tier 1 suppliers and LSPs
- Asked questions in person, and joined round-table discussions
- Networked with the senior executives across the industry
- Made new contacts, gained new introductions and developed new business opportunities
- Benefitted from the interaction at social occasions, including the main conference dinner and introductory cocktail reception (all included in the delegate fee)
- Receive soft copies of the speaker presentations to download and circulate within their organisations
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