By Namrita Chow
China’s tier suppliers and OEMs are looking for greener logistics service providers, although like their counterparts in other parts of the world, their objectives appear often to be more economic than ecologic. It is this thinking that is leading some Chinese OEMs to consider a switch to returnable packaging and container pooling, according to Duncan Deng, director of automotive services for Chep China.
“Using returnables for a certain scale of mileage has cost savings,” says Deng. “If you consider the whole supply chain–the life cycle of returnables, the space utilisation and transportation cube utilisation–it saves costs.”
Many carmakers–70-80% of OEMs in China, estimates Deng–have started using returnables at some stage of their supply chain, and a trend is now starting to form for local manufacturers. Deng says his research shows that Chery Automobile, Zhejiang Geely Automobile–the new Volvo owners– and Shenyang Brilliance Jinbei Automobile, all use some amount of returnable packaging.
Shanghai General Motors Wuling Automotive (SGMW) is also currently trying out returnables with two of its local service providers, as is Changan Ford Mazda Automotive.
Some executives in China are even putting green credentials higher up their list of criteria for logistics providers. Carrie Zhang, senior logistics manager for Asia Pacific at Delphi Automotive Systems China, has it in her top three. A Delphi service provider must be financially stable, technically strong and actively involved in pushing green initiatives.
“We ask them if they have any specific green initiatives in local transportation–specifically from an emissions perspective,” says Zhang.
But not every company claims the green way is always the best way for all of its supply chain. Gary Dubberley, operations manager for parts and service in Asia Pacific for tier supplier TRW Automotive, says when supplying parts to OEMs it is feasible to use recyclable containers, but with sales for aftermarket parts going on single runs to far off destinations in the vast interiors of China, using reusable packaging can be more difficult. The same also applies for exports.
“For OE business, TRW uses returnable packaging as we have substantial volume and regular milk runs,” says Dubberley. TRW uses blue KT boxes that are usually 350mm by 300mm. For exports Dubberley cannot use the same system. “For export we can’t use something too flexible or too light so we use wooden pallets–some made from pulp which is environmentally friendly,” he says.
Fuel price increases have also had a positive impact on encouraging returnable packaging. As fuel prices have jumped around 40% in the last five years, the cost of transporting goods across China has risen. Inefficiencies in packaging and space use with non-standardised containers add to the cost of transport.
“We really do need to drive standardisation of packaging,” says Delphi’s Carrie Zhang.
