In a sector often maligned for failing to innovate, two companies in Europe, Daimler and logistics provider Vega, are searching for new and improved ways of doing finished vehicle logistics.
In Europe, given the need to reduce costs while responding to structural changes in the market and vehicle flows, Daimler and its commercial vehicle carrier Vega International have put innovation at the forefront of their strategies for vehicle logistics. Approaches have ranged from the radical redrawing of port networks to the production of bespoke covers for every single vehicle; or simply convincing a customer that the oldest methods – like ‘jockey’ transport – can be best in some cases.To paraphrase Einstein, you cannot solve a problem by using the same kind of thinking you used to create it – and that's as true for the vehicle logistics industry as it is for any other. But innovation in logistics needn’t necessitate a new theory of relativity. It is often about taking a fresh look at what you take for granted. And then taking another look.
A company keen on key performance indicators, Daimler has been studying how it can make its global distribution network more efficient. According to senior manager for worldwide transportation/vehicle distribution Egon Christ, this includes the redesign of its logistics network and transport flows in Europe on both land and ocean.
Last October it established a new departmental function o look at the redesign and planning of the network. Marieke Dressler, in charge of rail and intermodal logistics, has been tasked with finding more transport options and flexibility amid limited capacity as the OEM carries out a major new launch for cars and trucks over the coming years.
“We continuously review the number and locations of compounds in the entire network,” says Christ, pointing to major changes afoot across Europe. In France, Daimler plans to start operations in a second compound in the Paris area; in Italy, it is consolidating its existing network; in Germany, it is looking at integrating its two main hubs near the Bremen plant and in the southwest of the country. “ These w ill integrate future north and southbound volumes in a rail backbone with multimodal onward transportation options to the final destination countries,” says Christ. “This concept expands our network options and increases our distribution flexibility.”
Daimler is also looking at extending the opening hours of its facilities to allow carriers to load during the night, thereby avoiding congestion both at the loading areas and on the road, as well as using loading facilities for rail more efficiently.
For ocean, Daimler has changed several short-sea routes, including for cars destined for Sweden, which now move from the German port of Cuxhaven to Södertälje, near Stockholm. The changes also include a new route for commercial vehicles to Malmö from Zeebrugge in Belgium.
Elsewhere, Spanish production for Denmark is now shipped via Zeebrugge to the port of Esbjerg, while new Mercedes-Benz Citan vans from the Maubeuge plant, in northern France, are being transported from Antwerp to Livorno for the Italian market. “A major change has also been made for the imports to Turkey,” adds Christ, “where all volumes get consolidated now at Autoport Istanbul, originating from Monfalcone, Antwerp and Valencia. Russia is supplied via a short sea concept from Bremerhaven to Paldiski [in Estonia].”
Revised port strategy
These changes to land and short sea routes are contingent on the revisions Daimler is making to its European ports strategy, a process that started last year. Christ says the company aims to shorten transit times in its international supply chains while ensuring that all ports are able to handle its growing volumes with the best processes available. Daimler must also factor in a decline in imports to Europe even while demand on capacity for export has grown, especially to the Far East and US. This imbalance has resulted in fewer import vessels available to take vehicles back out, reducing the frequency of export sailings.
“The main flows are export units that are shipped via the North Sea ports,” says Christ. “Today, the majority of the units are exported via the ports of Bremerhaven, Hamburg and Zeebrugge or Antwerp. Bremerhaven is also used as a main hub for imports originating in the US, South Africa and, in future, from Finland [where a contract manufacturer will build A-Class models].”
The competitiveness of these ports is important to Daimler as it concentrates on making the most effective use of its logistics expenditure while reducing overall outbound transit times. Port infrastructure and the service frequencies on offer for pre-carriage transport are the main drivers for Daimler’s selection, according to Christ. “Daimler quality standards have to be met by the port, sufficient space has to be provided within it and all services requested have to be offered,” he stresses. “These factors determine which ports will be selected and used to what extent by Daimler in the future.”
This demand for quality of service extends to its outbound road-based carriers and is encouraged by Daimler’s European Carrier Day, where the company discusses and rewards performance. Last year, the 13th such event noted an improved performance by carriers, which followed several years of declining results that Daimler attributed to scaled-back fleets, lower investments and a high number of sub-contracted carriers in the network. Christ stresses that the use of such providers was a challenge for the carmaker as it involved aligning their operations – which was more difficult to control than those directly contracted – with Daimler’s quality and performance standards.
To h e lp improve carrier performance, Daimler carries out regular test loadings and audits, training sessions for drivers, KPI assessments for quality, and holds continuous improvement meetings. It also issues a regular update of its outbound Operations Manual for Vehicle Handling. The good news is that the carrier base has now adjusted fleet size to the actual demand. Christ says this is the main reason for the improved quality and performance over the last year.
Covering the cost
At its carrier day, Daimler introduced a new award category for innovation. The first winner was Austria-based Vega International Car Transport and Logistic Trading, recognised for various innovations, including protection measures for commercial vehicle transport and training initiatives.
Peter Blum, operations manager at Vega, explains that moving bigger vehicles brings with it greater potential for paint damage, and not just on long journeys to regions such as Central Asia. “On any highways in Europe you have the same problem with stone hits,” he says. “These are in two main areas: the front panels and side masks, especially on the left side because stones are flying from the other highway at a 90-degree angle.”
Vega developed what Blum terms a “bubble folio” – a protective cover with an air cushion between the main glue and the plastic – that protects the paintwork from 95% of hits as well as the sun’s ultraviolet rays, which is important since a paint repair job on a bus can cost up to €5,000 ($6,530).
According to Blum, Vega’s clients have certified the cover, which is fitted at the production plant and Daimler is using it on all the buses it ships with Vega, equal to around 4,000 vehicles per year. Another customer looking at using the folio will mean another 1,000 buses.
Windscreens are another set of sensitive parts, costing up to €8,000 to replace. Their protection must not limit visibility for the driver and must not allow for any air bubbles – a challenge when you have large windscreens of varying shapes. Vega has developed one wrap for flat windscreens and another for ‘three-dimensional’ screens, which are bespoke for each particular application. Testing for the new protection shows it is effective on 80% of hits and Daimler’s vehicles are again at the forefront of the trials.
Vega also has a number of innovations in mind for drivers and the company carries out extensive and regular training, including multilingual videos covering everything from documentation handling to driving behaviour. “We understand that drivers are key and if they are well-trained, feel happy and are well paid, then you can expect a good market share and a satisfied customer,” says Blum.
Each of Vega’s 1,000 drivers in Europe carries a full set of cleaning tools, as well as tools to check oil levels and to unlock parts of the vehicle that usually remain locked, but to which the driver may need access. They also carry the temporary licence plates needed to drive the vehicle from the factory to the customer and Vega has come up with a secure fixing tape for these that protects the paint and is easily removed.
Drivers will soon have a new mobile phone app to provide real-time reporting, which promises to speed up invoicing and reduce capital tied up in a delivered unit. “When it comes to moving 60,000 units in a good year, you should be able to report everything in your system,” says Blum. “Each of these movements needs to be transferred to a database and a web platform for the clients.”
The Vega app has a number of functions but will be used mainly for reporting and quality issues. The system also has the capability to notify the customer’s factory when a driver is in the vicinity to pick up an order. Full deployment is expected in January 2014.
Some of the best practices are old ones and Vega points to distinct advantages of ‘jockey’ delivery – where a vehicle is driven to its customer as opposed to being carried on a truck – but Blum says customers often need convincing.
Truck-on-truck delivery is typically considered better since it allows for zero-mileage on the delivered vehicle. However, Blum points out that there are significant benefits to jockey delivery. “Our trained drivers use the truck on its first couple of thousand kilometres, meaning they can detect any quality issues that have not been detected in the factory and remedy them before delivery to the customer,” he explains.
Blum also suggests that the method is more efficient. If a customer wants 100 units collected, Vega can send 100 drivers the next day. A transport company which loads vehicles and which has several contracts on the go, would not be able to move the equipment to handle that order in such a short time.
Truck-on-truck delivery can also fall foul of the diverse European restrictions and varied dimensions for height, weight, length and overhang, which can require carriers to switch to a different truck at borders. Not so with jockey.
Driver delivery also reduces empty mileage because it is a door-to-door service rather than a loaded delivery in which the carrier drops off an order and then has to drive to the next pick-up point, with all the extra fuel consumption and emissions that entails. “Transporters are 25-tonne trucks,” Blum points out, “so they are burning a hell of a lot of fuel.”
Added to that is the fact that a truck fleet can be up to ten years old, with older, often less efficient engines. “We are moving the latest standard, so emission-wise we are ahead,” he says. “We are using less fuel even though we drive every single unit on wheels. This is a key issue when it comes to green logistics. Sooner or later no producer can hide this, they have to look for zero emissions.”
The working relationship between Daimler and Vega – as well as their individual promotion of new ideas for equipment and efficiency – is a good example of the flexible and mutually responsive problem solving that the automotive industry in Europe needs right now. With more training opportunities to encourage creative thinking in facing the challenges within the industry, such as that provided by the recent introduction of an innovation module at the Association of European Vehicle Logitics Academy training programme, in future there should be no shortage of new ideas being brought to the table.