Spain’s recovery in vehicle production and sales in 2015 was faster than many would have anticipated even at the beginning of the year. Spurred on by strong exports and a domestic market that rose by more than 20% on the back of an incentive programme, vehicle production was on pace to finish the year higher by around 10% compared to 2014, at around 2.6m units.
The growth has strained vehicle logistics capacity, especially for a sector that had been battered by a prolonged recession and financial crisis that reduced domestic sales by more than half, and led OEMs to cut production across the board. Many smaller carriers didn’t survive, while rail capacity was also diminished.
The response among carmakers and logistics providers today is a scramble to secure transport access. Gefco Spain, for example, is buying more car carriers to add to its 200-strong truck fleet, while it is also seeking to increase its fleet of rail wagons, according to director general Julian Navarro.
For General Motors, which has its largest plant in Europe in Zaragoza, in north-east Spain, using rail more often and more efficiently for vehicle logistics has become strategic, according to Guillermo Mancholas, supply chain and logistics director for GM Spain. The carmaker has made progress in this area in part by working with Gefco as a 4PL in Europe, which provides opportunities to increase the OEM’s logistics scale, including by combining flows with other carmakers, such as PSA Peugeot Citroën, Gefco’s former majority owner and still its principal customer.
GM exports more than 91% of its production from Zaragoza, almost all of it to Europe, where Opel/Vauxhall brands are sold (it also ships a small amount of vehicles to markets further afield, including Egypt and South Africa). The biggest customer for the Zaragoza plant is the UK, at 27% of production, which moves by short-sea shipping. However, a large share of production goes across the continent, including to Germany, France, Italy and Turkey, for which a variety of logistics options are possible, including rail.
Annual production at Zaragoza has risen by some 80,000 units between 2013 and 2015 to 360,000, boosted by the localisation of the Opel Mokka at the plant from South Korea. Today, GM Spain ships 1,700 finished vehicles daily from Zaragoza. Of this volume, more than half moves by rail to ports and other destinations across an average of 4.5 trains each day. The remainder moves across 100 trucks per day to different markets. For onward transport, short-sea shipping also plays a big role, eventually touching 72% of total production, including 53% from the port of Pasajes in the north of Spain.
- Guillermo Mancholas, GM Spain
GM and Gefco also use several distribution compounds, including three in Germany, one in Denmark, and five in France across different regions throughout the country.
Across this complex setup, GM and Gefco have made improvements in the carmaker’s rail network. For example, GM established a new train based on the Saturday usage of available time slots to obtain a better rotation of rail wagons. The Saturday slots help to increase transport capacity after the introduction of the Mokka, a crossover SUV, reduced loading factors from Zaragoza, as fewer vehicles could be fit into equipment compared to smaller cars built at the plant, such as the Opel Corsa. GM plans to increase the load factor from four to five Mokkas per rail wagon.
“After testing different load configurations, we realised that there was one where we could load five Mokkas. However, at this point, some conditions need to improve in order to implement this scheme fully,” said Mancholas.
GM and Gefco also added rail capacity to transport cars to different destinations, including direct shipments to distribution compounds. In its 4PL role, Gefco combines both truck and rail flows for GM production.
“For example, we can fill trucks from another OEM with Opel cars. We do the same with rail shipments from France to Spain for the return journey,” said Mancholas.
Thanks to these and other improvements, GM’s use of rail has increased from 40% of total production to 50% over the past two years, even as output rose sharply.
“We have increased our use of railway for pre-carriage up to the port of exit and the use of short-sea lines in order to provide high volumes to the distribution compounds,” he said.
Mancholas is targeting further improvements for rail. For example, GM aims to consolidate its rail usage into block trains of 550 metres in length and ship directly on the UIC wide gauge system from Barcelona to Germany – thus avoiding the rail gauge switch between the rest of Europe and the Iberian Peninsula. Mancholas furthermore wants to increase its use of rail for pre-carriage to ports of export, including the development of a rail corridor from Zaragoza to Valencia port via the town of Teruel.
As production grows, GM’s Zaragoza plant is adapting by increasing flexibility in its vehicle transport and distribution. This is not only saving costs, points out Mancholas, but represents a significant increase in vehicle logistics capacity. That will be critical as the plant is expected to move towards 500,000 units per year by 2018, by which time it will have added production of PSA vans to its line up.