Is the logistics industry changing direction in the automotive sector?

Some observations from our member Priority Freight;

Is the logistics industry changing direction in the automotive sector?

Over the past three years, supply chains in every industry have been impacted by the global pandemic and Brexit; arguably none more so than the automotive sector. The pandemic exacerbated some of the issues the industry was already grappling with, and it also revealed some new and unforeseen challenges – but how has logistics within the automotive sector adapted?

In many cases, the OEMs who have weathered the storm most effectively are those employing the services of an end-to-end provider for their logistical movements. This often provides access to a wider choice of solutions and alleviates the administrative burden associated with increasingly complex, cross-border shipments.

One approach being explored more frequently in the sector is nearshoring. Many companies are looking to change their relationship with Tier 1 suppliers, either in favour of more locally sourced materials or, in some instances, producing key components themselves.

Although nearshoring has many benefits, compared to offshore models it comes at a cost to larger companies that have to relocate, invest in new infrastructure or incur higher labour costs. This inevitably affects the price of goods to the end-user so, if this kind of change does come, it will have to be a gradual shift. Also, to be considered is the return on investment for infrastructure supporting an existing model; a major shift away from this will not be free of financial penalty, either in the short- or medium-term.

We think that forwarders will most likely follow demand and adapt accordingly. While some industries will benefit from nearshoring, that may not be true for all. We are lucky to live in a globally connected marketplace, and the ability to source the very best parts from anywhere rapidly is one of this era’s hallmarks. The challenges of doing that remain, and in many ways have been exacerbated of late, but ultimately it will remain the dominant model for some time.

Physical paper trails are still relied upon in large parts of the shipping industry, but we have seen a shift in the technology available. To help provide visibility to our customers, expedite numerous cross-border processes and maintain an audit trail, we use a number of digital tools, including our cloud-based transport management system (TMS) with real-time tracking. Our TMS operates in multiple languages, currencies and metrics, making it suitable for all situations. As the software is cloud-based, it can also be accessed from any location, on any browser and device, providing all stakeholders with instant updates.

There are numerous experimental technologies capturing the national headlines, such as drone deliveries and robotics, but their application is limited when considering the volume, weight, and dimensions of many of our shipments.

Although the circumstances may have changed, the ultimate goal of the past few turbulent years has remained the same from an automotive supply chain perspective; get the goods from origin to destination as quickly and efficiently as possible. That is unlikely to change any time soon. It’s most likely that just-in-time manufacturing will remain the norm, and automotive supply chains will need to rely on the timely transport of goods by air to maintain supply chain integrity.

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