DP World keeps automotive production moving with resilient South-East Asia supply chains

Automotive production is becoming more distributed, meaning a vehicle assembled in one market comprises components moving in from several others. To some extent, this diversifies risk, but it can also introduce more points of failure if it is not managed well.

That is certainly true in South-East Asia. Building a connected and resilient automotive supply chain there depends on knowing where the supply chain risks could emerge. It is also about responding with the right contingencies before vehicle production is affected. Being able to do so begins with working out what resilience looks like, according to Jeanie Tan, chief commercial officer for logistics in Asia Pacific at DP World.

“Defining resilience is often the first step when building any agile supply chain in today’s market,” she says. “It has become a buzzword that many people interpret to mean recovering quickly after a disruption. For the automotive sector, however, focusing on recovery alone carries too much risk.”

Tan maintains that knowing that a problem exists is not enough to solve it. To properly understand resilience, you need to understand where risk is emerging and ensure there are viable alternatives when original plans no longer work.

Forewarned is forearmed 

Research from DP World’s Without Logistics Automotive Report shows that disruption costs automotive companies $1 million per incident on average. Tan says the real objective is to design supply chains that prevent disruption impacting production in the first place and creating early warning systems to pre-empt such disruption. Visibility is a priority. The level of responsiveness depends on knowing when a supply delay has happened or might happen and also being able to act on the signals and data.

“To do so, you also need to build options and credible alternatives, whether that’s a different route when conflict blocks the usual way, or warehousing that can store goods safely and cost effectively while you wait to see what’s coming next,” says Tan.

There also needs to be close coordination and information sharing between vehicle makers, suppliers and logistics partners. System integration is very important for information sharing, according to Tan. “The more effectively data can be connected across your supply chain, the earlier you can identify and then act on risks before they reach your production line,” she says.

Complex geography

South-East Asia is a vast area with an extensive spread of supplier and export markets. It has major manufacturing hubs in cross-border land corridors, in Indochina for example, as well as archipelago markets, such as Indonesia. These markets operate with different customs requirements and transport networks. A supply chain designed for one market often needs to be adapted significantly when it expands into another. That presents specific challenges for the supply chain, with bottlenecks in different parts of the region. Cross-border movements and inland connectivity are two of the main problem areas, according to Tan, with barriers to cargo movements from international ports, as well as within local island destinations.

DP World’s response to this has been to build multimodal local and regional networks, combining market-specific knowledge with its global supply chain expertise. “In the Philippines, for example, the Tanza Barge Terminal provides a waterborne alternative circumventing congestion around the capital Manila,” explains Tan.

“In Laos, Savannakhet Dry Port puts customs in the same place as transport and warehousing to ease trade across the East-West Economic Corridor linking Laos, Cambodia, Myanmar, Thailand and Vietnam.”

Inbound logistics requires manufacturers to strike a careful balance between maintaining the lean, just-in-time inventory models that support efficiency and protect continuity of production. Excess inventory adds cost, but carrying too little leaves production exposed. That is not just a question of distance. A component can be physically close to an assembly plant but still unavailable because documentation or inspection requirements haven’t been completed correctly.

“Our approach is to manage compliance as part of the supply chain rather than treat it as a separate activity,” says Tan. “By linking documentation, customs, warehousing and onward transport, we help customers create more predictable flows across borders.”

DP World helps manufacturers navigate a disparate regulatory landscape. The goal is always to reduce friction on the route between parts, production, finished vehicles and the customer.

Service parts strategy

That also applies to the aftermarket, where there is a balancing act between inventory availability and cost across multiple markets. One of the biggest challenges is making sure parts are in the right place before they are needed. “Customers expect quick access to replacement parts, but holding every part in every market quickly becomes expensive,” says Tan. That challenge becomes even greater when a modern internal combustion vehicle can contain around 25,000 individual parts, each with different demand patterns and service requirements.

However, not every part needs to be treated in the same way, according to Tan. Vehicle-off-road and safety-critical components often require local availability, while slower-moving inventory can be positioned regionally and replenished as needed. Regional hubs and bonded facilities can also help place inventory closer to demand without manufacturers having to duplicate stock across every market.

“Our role is to help customers match inventory strategy to service requirements, balancing responsiveness with cost,” says Tan. “That means combining warehousing, transport and order management in a way that gets the right parts to the right location without carrying unnecessary stock across the network.” 

DP World’s automotive capabilities extend across service parts, repair and reverse logistics, allowing the company to support the aftermarket alongside production parts and finished vehicle flows.

DP World’s extensive multimodal network provides flexible connections and helps its customers maintain production and aftermarket parts deadlines.

Tan cites the example of a South Korean automotive manufacturer moving complete knockdown (CKD) kits between India and Uzbekistan. When that OEM was unable to use an established route, DP World reworked the movement of CKDs through China and maintained a flow of around 500 forty-foot equivalent units (FEU) per month, adapting the route without affecting production.

“Across Asia Pacific, we apply the same principle through rail, road, port and inland logistics networks,” explains Tan. “This ensures manufacturers have practical alternatives when conditions change, while still meeting their operational demands.” 

The same focus applies to finished vehicles. These represent high-value inventory, making it critical for manufacturers to minimise dwell time and move vehicles from production to market and customers as quickly as possible, while ensuring they arrive in the expected condition. One example is in the Philippines, where DP World is working with local strategic partner Asian Terminals at Batangas Integrated Port (BIP). The port is home to the country’s biggest car carrier terminal, accounting for around 80% of the country’s annual car imports. BIP has world-class ro-ro facilities and is also well-connected not just by road to the rest of Luzon, but also to island provinces in Visayas and Mindanao.

Optimising the whole supply chain

DP World is also helping customers manage operational costs for vehicle shipments across South-East Asia. Some of the biggest savings are achieved by removing unnecessary steps. “At one container terminal we created a dedicated pre-delivery inspection facility within the port and expanded dedicated vehicle capacity from 300 to 1,000 spaces,” explains Tan. “By removing the need to transfer vehicles to external inspection facilities, we reduced handling, delays and unnecessary costs while helping vehicles move more efficiently through the finished vehicle supply chain.” 

The solution supported an expansion of its import volumes for the customer in Vietnam and today enables DP World to manage 75% of the automaker’s imports into the country.

According to Tan, opportunities like that can have more impact than shaving a small percentage off a freight rate. “Whether it’s reducing unnecessary movements or positioning inventory more effectively, the focus is on making the overall supply chain work harder rather than simply making individual activities cheaper,” she says.

Digital vision 

Digital technology is also playing a big part enabling DP World to gain end-to-end visibility across inbound parts supply from tier-n suppliers to lineside.

“We use a variety of proprietary technologies, including warehouse, order and transport management systems, and integrate them with customer platforms to create a full, detailed picture of the supply chain for our customers,” says Tan. “Bringing information together in this way gives customers greater visibility across movements and helps identify and respond to potential disruption faster.” 

These digital technologies are helping DP World with its objective of designing supply chains in South-East Asia and beyond that avoid threats to production, secure timely finished vehicle deliveries and ensure service parts are in the right place before they are needed. They are also supporting the close coordination and information sharing required of vehicle makers, suppliers and their logistics partners to build resilience in the supply chain.

That requirement will only grow as the changing mix of internal combustion engines, hybrid and EVs requires additional logistics across areas including battery handling and storage, safety and compliance, traceability and reverse logistics. As supply chains become more complex, the ability to connect data, infrastructure and multimodal transport will become an increasingly important part of maintaining a resilient production and distribution line.