Executive Briefings

Market for Automotive Logistics Seen to Have Vast Potential for Growth

Still growing, with Europe forecast to grow by 6 percent and North America by 5 percent, automotive logistics offers growth prospects but only for those logistics service providers who can exploit change. This is one of the main conclusions of the latest report from Transport Intelligence, "Global Automotive Logistics 2014".

North America continues to expand and the health of the German and UK car industries balance out the problems in France and Italy, but it is China and other emerging markets that will present the crucial test for logistics providers in the sector.

According to the report:

• China production and demand may be growing but a lack of openness makes it a very difficult logistics market.

• Vehicle manufacturers are evolving new logistics systems to adapt to more globalised production.

• Expansion in many emerging markets can be difficult, with knowledge of local conditions essential. Managing this issue will be key for major logistics service provider’s competitiveness in the future.

The underlying demand for automotive logistics services is healthy with many parts of the world reaching a level of prosperity that is driving a rapid increase in car ownership. Indeed the potential for growth appears to be enormous. The production base that needs to be put in place to meet this need is equally vast, but despite the best efforts of vehicle manufacturers the effect of this expansion has been a growth in complexity. Big car companies are now faced with a trend towards networked supply chains, often crossing continents and making life much more expensive and complicated than the “local for local” production model they have always striven to create.

There are also other changes bubbling under the surface. Technology is making the largest suppliers to become complex systems integrators, which in turn is increasing the demands of their supply chains and assembly operations. The result is that certain of the largest suppliers will require more and better logistics management.

The conclusion of the report is that the underlying structure of the automotive logistics market is evolving as demand grows. Logistics service providers will need to adapt to the new types of markets if they are to benefit from this growth.

Source: Transport Intelligence

North America continues to expand and the health of the German and UK car industries balance out the problems in France and Italy, but it is China and other emerging markets that will present the crucial test for logistics providers in the sector.

According to the report:

• China production and demand may be growing but a lack of openness makes it a very difficult logistics market.

• Vehicle manufacturers are evolving new logistics systems to adapt to more globalised production.

• Expansion in many emerging markets can be difficult, with knowledge of local conditions essential. Managing this issue will be key for major logistics service provider’s competitiveness in the future.

The underlying demand for automotive logistics services is healthy with many parts of the world reaching a level of prosperity that is driving a rapid increase in car ownership. Indeed the potential for growth appears to be enormous. The production base that needs to be put in place to meet this need is equally vast, but despite the best efforts of vehicle manufacturers the effect of this expansion has been a growth in complexity. Big car companies are now faced with a trend towards networked supply chains, often crossing continents and making life much more expensive and complicated than the “local for local” production model they have always striven to create.

There are also other changes bubbling under the surface. Technology is making the largest suppliers to become complex systems integrators, which in turn is increasing the demands of their supply chains and assembly operations. The result is that certain of the largest suppliers will require more and better logistics management.

The conclusion of the report is that the underlying structure of the automotive logistics market is evolving as demand grows. Logistics service providers will need to adapt to the new types of markets if they are to benefit from this growth.

Source: Transport Intelligence