Cost pressure and tariff turmoil major concerns for inbound logistics says survey
The results of the first "Automotive Inbound Logistics Survey", carried out in partnership with DP World, reveal that the automotive logistics sector is responding with fortitude to the cost pressures, tariff turmoil and supply chain disruption affecting the sector in 2025.
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Those canvassed in the "Automotive Inbound Logistics Survey" from a range of global vehicle manufacturers, tier suppliers, logistics and technology providers indicated the need to adapt to the changes in global supply chains and are looking at the latest technology to help them do so.
The results of the survey - which will be released in full on Automotive Logistics soon - revealed that cost pressure caused by continuing inflation, high capital and labour costs were a significant concern for 41% of respondents. At the same time, demands are being made by OEMs and suppliers that logistics providers cut costs at a time when supply chain disruption from tariffs, diversion around conflict zones or weather events are actually driving costs up; 35% of respondents who were asked to rank their top concerns said trade war, tariffs and uncertainty were a major concern. Regarding tariffs, for many in the industry it is a game of wait and see, and sticking to current output and strategy, though many are also diversifying their sourcing of parts and materials, and looking at developing new trade routes.
Everything that we do in the company requires
logistics to be part of the decision – Marcio Lucon, GM
Labour and skill shortages along with recruitment and training were also a concern, as were increasingly complex regulations.
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The survey also canvassed opinion on the main challenges affecting each logistics mode. Freight forwarders cited rising costs, trade and tariff uncertainty and supply chain disruption as the top three challenges. Trade and tariff uncertainty are again a concern at the ports, as are skills and training, but the number one challenge in that sector is congestion and increasing volumes. Almost 50% of those surveyed said that cost pressures were a big challenge affecting road transport and nearly 40% said that was a concern for ocean transport. Disruption to supply chains was also a main concern in the road and ocean transport sectors.
The experts surveyed in the inaugural report on inbound automotive logistics cited a range of negative effects from the various cost pressures identified, including on profitability, logistics cost, rates and contracts. A third of logistics respondents pointed to the renegotiation of lower rates by both OEMs and tier suppliers. Around a third also pointed to reduced profitability.
Beyond immediate financial pressures, 30% of those surveyed said that intense cost cutting could lead to risks around service delivery quality as companies cut corners to survive. However, 29% of respondents also mentioned wider efficiency savings as a response to cost pressures, particularly with regard to fuel and energy, which indicates a positive environmental outcome from the impact.
Tariff impact
Trade wars, tariffs and uncertainty were the second most significant problem that respondents to the survey noted, accounting as a concern for 37% of them. Many are still coming to terms with the long-term impact of the US tariffs that the Trump administration brought in this past April and those reciprocal tariffs taken by a number of trading nations around the world.
Automotive tariffs are subject to different rules compared to other commodities based on trade agreements such as the USMCA, which grants reduced or duty-free tariffs for North American content, and the general Section 232 tariff, which imposes a 25% levy on autos and parts from other nations. Unsurprisingly, the broad view from the survey is that the tariffs are expected to remain a core issue and disputes will have a negative impact on inbound logistics. The three main impacts of US tariff policy identified by those surveyed were higher vehicle prices, uncertainty and supply chain disruption.
However, many respondents were also confident in managing those impacts and looked forward to potential changes in policy as new trade deals emerge. It also remains to be seen what the outcome will be of the US Court of Appeals for the Federal Circuit, which ruled Trump had gone too far in declaring national emergencies to justify the tariffs on global trading partners.
In the meantime, respondents to the survey identified three main impacts of the tariff policy. Higher vehicle prices (38%) and a pervasive sense of uncertainty (35%) will negatively affect business and consumer confidence, while supply chain disruption (33%) will arise as OEMs and tier suppliers work to reroute parts, adjust inventory or explore nearshoring to escape the tariffs.
The overall picture from the survey is crystal clear: the impact of US tariff policy was universally perceived to be more negative than positive for every single country measured, including for the US itself. There are no winners in a trade war.
Regional adjustments
Despite the confidence in dealing with disruption, 33% of inbound logistics providers revealed in the survey further disruption to supply chains was a concern. That is both as a consequence of the tariffs already highlighted and what adjustments to regional production and component sourcing will mean for logistics services. A number of OEMs and suppliers have indicated stronger nearshoring in the US, such as Hyundai, which recently announced it would increase investment in US production to $26 billion, up $5 billion on the investment announced in March. That investment covers more localised production, including strategic steel manufacturing, as well as the set up of a Robotic Innovation Hub. Localised production and supply by Korean carmakers, on top of the tariffs on parts imports, has prompted Hyundai and state-owned Korea Trade Insurance Corporation (K-Sure), along with Hana Bank, to offer support to domestic tier suppliers likely to be affected with a new KRW 630 billion ($450m) fund.
A related concern revealed in the survey, however, is that geopolitical and trade tensions could impact the supply of critical materials, such as rare earth metals, and these could impact inventory levels and disrupt logistics flows, leading to the sort of supply chain instability the automotive industry was hit with during and after the Covid pandemic.
Partnerships in supply chain planning
Partnerships and collaboration were identified as one of the best ways of dealing with the challenges facing the automotive inbound logistics business, with almost a third of those surveyed identifying cooperation as a coping mechanism. A high number of respondents also pointed to supply chain planning and network optimisation and underpinning both of these are investment in digitalisation for greater transparency in the inbound supply of parts. As discussed at this year’s Automotive Logistics and Supply Chain Europe conference, OEMs need to move from transactional relationships to long-term strategic partnerships in the face of geopolitical and regulatory uncertainty and supply disruption. That includes data sharing and two-way visibility with logistics providers to proactively manage disruption. Examples include the strategic agreement GM signed with Hyundai last year to look at cost-saving joint product development, manufacturing and clean energy technologies. The OEMs are reviewing opportunities for combined sourcing in battery raw materials, steel and other areas. In August this year the two carmakers announced they were co-developing five vehicles and supporting that with joint sourcing initiatives for materials, transport and logistics. The agreement also looking at low-carbon emissions on steel as part of their commitment to sustainable manufacturing.
Digitalise to diversify
Among the strategic priorities for the automotive inbound logistics sector now is the need for digital tools to improve efficiency and ensure business continuity.
It’s always about technology – how we can become more efficient, more resilient and more productive – Gerardo de la Torre, Nissan Group of America
Data integration to enhance visibility and transparency across the supply chain is a priority and 34% of respondents said that investment in digitalisation was important. Of those canvassed 35% also looked to the benefit of data integration with other systems or stakeholders. The conclusion to be drawn is that investment in digitalisation should be viewed as cost saver, with a high return on investment.
However, cost and resources are a leading constraint on investment in digitalisation according to the survey. Cyber security is also a top constraint, given example with the recent attack on JLR in the UK. Digitalisation is also constrained by the lack of integration with legacy systems, a lack of data standardisation and the level of skills, training and understanding needed.
As indicated, experts also expressed confidence in finding the opportunities in the chaos and that includes continuing efforts to diversify sourcing and become more agile and resilient in supply chain planning. Investing in flexibility, visibility and optimised network design are strategic business imperatives. They are imperative as trade lanes shift at the same time as the west vies to compete with the east on the move to vehicle electrification and what that means for the supply chain. The top three areas for investment going forward according to the survey are digitalisation, supply chain planning, and artificial intelligence and machine learning. At this year’s Automotive Logistics and Supply Chain Digital Strategies North America conference speakers from Mazda, Nissan, VW Group and International Motors, along with tier suppliers Aptiv, Bosch and Henkel talked about AI, data, automation and the future of connected supply chains.
Reducing waste
One final important factor that cannot be overlooked for the future of the automotive inbound logistics sector is a strong commitment to sustainability for competitive advantage. Meeting sustainability targets is seen as a big challenge in road transport as it is in air freight services.
Packaging is a focal point for efforts to reduce waste, which 42% those surveyed said was key driver of change. Packaging initiatives also helped to lower costs and reduced product damage. The EU’s new Packaging and Packaging Waste Regulation (PPWR) aims to improve sustainability by setting the minimum recycled content targets for packaging at 30% by 2030 and 65% by 2040, as was discussed at the Odette 2025 conference in August. PPWR is a binding regulation which introduces mandatory recyclability grades, digital tracking and product passports, extended producer responsibility and penalties for non-compliance. Another key driver of change in automotive packaging is enhanced sustainability, according to 26% of those surveyed.
