The latest report from Transport Intelligence (Ti), Automotive Supply Chain and Logistics 2018, found that the automotive logistics sector is undergoing fundamental change as manufacturers and suppliers adjust to new technology.
The report investigates current and future automotive sector trends, sizes and forecasts automotive logistics markets, profiles 15 leading automotive logistics providers and analyses the supply chain and logistics strategies of 12 leading vehicle manufacturers.
Report co-author and senior analyst Thomas Cullen said: “Logistics in the automotive sector is undergoing more change than at any time in the past 40 years.
“There are two major drivers of this change. One is the growth of new markets, especially in China but in other regions as well. However, the greatest change is being wrought by new technology. The internal combustion engine is gradually being replaced by electrical power and electronic control systems. The implications for the automotive supply chain and the nature of vehicle production are huge and will be reflected in the changed nature of logistics. Not only will the sources of components be different but the nature of those components and the way they are moved about within any assembly plant will be profoundly unlike what has gone before.”
The report offers a comprehensive view of the past, present and future of the sector. It assesses how the sector has come to be, investigating issues such as how and why production strategies have evolved, supply chains have become more complex, logistics costs have changed, and emerging markets have become more important. This provides context for the trends shaping the future of the sector. The report analyses the implications for logistics and supply chains of electric car manufacturing, new digital guidance technology, changing manufacturing materials usage and much more.
Ti’s CEO and co-author Professor John Manners-Bell said: “The automotive sector may become unrecognisable in time, driven by trends often referred to as Industry 4.0. These trends include the likely widespread adoption of electric vehicles, with all the attendant disruption this will have on engine production and spare parts logistics, to name just two key areas.
“In 5-10 years’ time, automotive supply chains are likely to look very different, although with the billions of dollars already invested in existing plants and production processes, change may be slower than many believe.”
There are numerous concrete examples of how supply chains will be forced to adjust. For example, all-electric propulsion will see the requirement for an engine plant disappear, with logistics focus shifting to the management of battery production and the movement of batteries to assembly plants. Changing materials use will change the nature of the ‘frame shop’, the feeding of steel coil will reduce or disappear and carbon fibre fabrication facilities will be created, feeding assemblies into the primary plant. New digital guidance technology could see a significant part of assembly operations become similar to that of IT hardware such as PC or mobile phones. Overall, there will be a dramatic fall in the level of assembly activity needed inside vehicle manufacturing plants, and this will have an enormous impact on logistics and supply chain management.
Mr Cullen said: “Many LSP face the need to rethink their business models. Not only will they have to deal with issues such as the changed pattern of globalisation, they will have to adapt to new operational activity by vehicle manufacturers and component suppliers. For example, the traditional road freight ‘milk run’ is increasingly old-fashioned and the road freight providers who specialise in it will already be under pressure. It might be suggested that large LSP who specialise in ‘Transport Management Services’ can adapt in such an environment, however this is also questionable as the attraction of new web-based ‘freight exchanges’ is only likely to increase especially if there is greater use of intercontinental air and sea freight.”
The report is available here.