“We look at the weather to see how we dress, so we should look at the macro-economic situation to see how we should do business. We should no longer resist change.” This was the key message from Zuo Xinyu, general secretary, China Automotive Logistics Association of CFLP at the recent Automotive Logistics China conference.
Moderating a large panel of senior executives, Xinyu explained how new technologies and new policies will shape China’s automotive industry in the future. The panellists reflected on some of the biggest challenges and opportunities for automotive logistics throughout China right now, and in the coming years.
Gao Yu, vice-manager of marketing management, Shanghai Lingang Industrial Area Port Development
...on the importance of developing ports and the challenges
If the automotive logistics industry is to grow, we will need additional capacity for warehousing and finished vehicle production. There are also challenges faced by ro-ro ports: space and shorelines are limited. Around the ports, nearby transportation and infrastructure is often weak, and rail/road combined would not necessarily be able to create the synergy we want to see.
It’s hard for new ro-ro companies to break through as ports that developed earlier have very expensive land. But ports have always been an important part of the supply chain and it’s important to make sure these are at the heart of the distribution line. At Shanghai we’re going to work with international logistics companies to make sure we have an automotive logistics hub right here.
Chen said that government subsidies currently help to keep logistics costs down, but without these it would be more difficult.
Huang Yingming, general manager, Shanghai Origin, International Logistics
...on technologies and the future
Cross discipline learning has been a new trend, and we are now looking to Alibaba and eCommerce businesses for inspiration. They are at the forefront and there’s a lot to learn. We already have good infrastructure and data management systems, and governments and customs have opened some databases to make it easier for people to share information and expedite declaration and clearance.
However, it’s always difficult to have databases fully integrated, but there’s great opportunity to develop for logistics companies. Improvements have been made and large orders can now be processed in 15 minutes rather than three to five days.
The automotive industry is slower than a lot of other industries. Alibaba realised six years ago that people want to place orders online and products will be ready for shipment. The automotive industry is lagging behind and we need to catch up.
Everything we do starts with customer need. As long as customers propose a requirement to us, we’ll be able to provide a solution. In the past everything was governed by the authorities, but in a free trade zone the government will offer more options. This will require a brand new mindset. We cannot work in silos. We have to look towards the long-term and be responsible for what we’re doing today.
Xiong Tianbo, deputy general manager, BYD AUTO
...on alternative powertrains
We used to manufacture traditional products but are now moving towards renewable energy.
Most international logistics companies can provide a comprehensive service today, whether this is for finished vehicles or parts. However, for alternative powertrains and parts, such as electric vehicle batteries, there are limited choices in logistics companies, especially when you are trying to understand customs information. I haven’t seen any logistics companies that have a prominent advantage in this field, and I believe alternative powertrains will be the future trend.
Chi Ruzhao, section chief, Anhui Jianghuai Automobile
Many of the big logistics companies focus on the big markets. They are really active in the US, or would look at the Chinese market only. However, when Chinese companies go global it’s likely to be to less developed countries. So there is market potential for automotive logistics companies to look to these markets. Hopefully Chinese companies can go with logistics companies abroad, and also invite logistics companies to China from less developed countries.
Chen Minghua, logistics manager, Geely International
...on the future
China is exporting more and more cars. It’s very timely to be speaking about ‘One Belt, One Road’ and the ‘Maritime Silk Road’. Last year, we used railroads to export to Kazakhstan and Belarus, and exported large volumes there. We used trains for the majority, but combined with the waterways to the capital of Belarus. Exporting companies need the support of partners at this critical junction.
Government subsidies currently help us to cut the cost of our logistics, but if the government decided to reduce or scrap the subsidies it would be difficult. We need to find how to bring more value-added services and learn to survive and thrive.
Qin Meng, senior manager, Porsche China Motors
In the future we will import multiple batches but a smaller volume of cars. If we are too flexible in our plans all estimates would fall apart. And, in light of difficulties in sales, OEMs need to focus on being dynamic and need to provide real-time reports. Sales information should be in the hands of logistics companies, and logistics companies that work for Porsche need to think about how they work.
Liu Qing, vehicle logistics and customs import manager, BMW China Trading
...on what everyone wants
Discussions on ‘One Belt, One Road’ are everywhere. So far, 57 countries have pledged to join the investment bank of Asia, which will provide another potential resource for import and export companies. There are many new policies coming out to support new initiatives, and new suppliers and ports are positive about what One Belt, One Road will bring. Hopefully there will be some new policies that can help us to export new models and [which will ensure] that logistics services are of a consistently high quality.
In China, customers have really high expectations and want products in the shortest time possible. Hopefully with new IT systems we can meet the requirements soon and make sure logistics are of high quality at a reasonable price.
Ye Lei, assistant general manager, Shanghai Automobile Import and Export Company
...on opportunities and challenges
We want to export, but most countries we’re exporting to are less developed. This presents opportunities for China, as we are at the same starting point. Traditional logistics companies have difficulties in meeting customer needs presently, as customers want more customisation, especially at the premium end.
It will be even more difficult when it comes to alternative powertrains. For lithium-ion batteries, whether you use the sea or other means, there are many barriers.