How DP World is helping automotive manufacturers stay ahead of disruption

Earlier this year, the automotive industry was ranked as the most disrupted industry in the world, for the second year in a row, in the AlixPartners Disruption Index. For David D’Annuzio, global vice-president and automotive commercial leader at DP World, the clearest consequence of all the disruption is that the industry’s traditional planning horizon has all but disappeared.  

“In the western automotive business you plan out new vehicles 3 to 5 years in advance. but if you speak to an automotive customer today, they can’t accurately predict what the next six months will bring. That uncertainty is creating a significant burden in terms of time, energy and stranded investments.” 

We see the uncertainty coming from several directions. Conflict between the US and Iran, and the resulting disruption to shipping through the Hormuz Strait have added to existing geopolitical pressures on automotive supply chains. Tariffs continue to impact the cost of importing materials, parts and finished vehicles, while regulatory fragmentation makes planning a constant challenge. 

Against this backdrop, traditional carmakers are overseeing a difficult transition to EVs. They must manage battery supply chains simultaneously with traditional ICE chains. They must deal with the uncertainty of consumer EV adoption. And they must find ways to compete with rapid development of software-defined vehicles from Chinese specialist manufacturers. If the market was growing exponentially, they might have more room to absorb this disruption. But with global light vehicle sales expected to remain level at around 91.8 million units, according to market analyst Mobility Global, such room is hard to come by. 

Building resilience through greater flexibility 

In response, manufacturers are placing greater emphasis on visibility and control across their supply chains, alongside the flexibility to respond quickly as market conditions evolve. D’Annunzio believes this is the right strategy but argues carmakers and their logistics providers can go further to shore up resilience by completely rethinking how they design and operate their supply chains. 

“Traditional lean supply chain models alone are no longer sufficient in today’s operating environment,” He says. “The old operating environment means sourcing parts from the cheapest global locations and having them reliably delivered just-in-time to maintain production without carrying excess inventory. Today, with all the uncertainty, this is very difficult. Carmakers now need to look beyond the lowest cost supply chain to build alternative suppliers and supply chains that are more resilient to disruption.” 

An integrated approach 

DP World's integrated logistics model gives automotive manufacturers a single partner to manage inventory, transport and routing decisions across the end-to-end supply chain. By designing greater optionality into customers' supply chains through multiple routing, transport and inventory options, the company helps manufacturers respond more quickly when conditions change. 

With a global network of logistics parks and special economic zones, DP World enables inventory to be managed in a tax-efficient manner. It can also switch cargo between transport modes while goods are in transit, allowing shipments to keep moving if one mode is disrupted. 

Rather than simply offering alternative routes, DP World provides a more integrated approach to managing inbound logistics. Typically, OEMs procure each stage of their inbound logistics from different providers to optimise costs. For example, on an Asia-Pacific-to-US supply chain, an OEM may contract one provider to move parts from the supplier's plant to the port, another for ocean freight, and then separate providers for drayage, warehousing and onward transport once the cargo arrives in the US.  

For D'Annunzio, this leaves the OEM responsible for managing every stage of the supply chain – an approach that is becoming increasingly complex in today's operating environment. “If disruption occurs anywhere in the supply chain, the OEM has to coordinate with multiple providers to resolve the issue, particularly if it requires rerouting shipments or adapting the supply chain,” he explains. 

OEMs should instead consider assigning responsibility for an entire supply chain of a particular part (parts from the same or similar origin) to a single logistics provider. This allows the provider to apply its expertise in procuring and managing logistics services on the OEM's behalf, while coordinating every stage of the journey. 

“If there is a complexity or supply chain needs to be reconfigured, the OEM doesn’t have to dedicate resources to managing that process,” says D’Annunzio. “Operators like DP World take responsibility for making those decisions by rerouting cargo where necessary and ensuring parts reach their destination on time.” 

Of course, manufacturers do not want to put all of their “eggs in one basket.” The point is not to consolidate every supply chain with a single provider, but to assign responsibility for each end-to-end supply chain to one logistics partner. OEMs can assign different end-to-end supply chains to different logistics providers, depending on their requirements. In that way, “they have the best of both worlds”, says D’Annunzio. 

The true cost of fragmentation 

Supply chain disruption brings with it inevitable hidden costs that are not always reflected in the traditional criteria for lowest cost and lean delivery. While some of those costs might be visible on a profit and loss sheet, for example the use of airfreight for a logistics leg – other are less obvious, such as the time and resources required to manage multiple logistics providers across a supply chain.  

“Managing multiple providers, issuing RFQs, coordinating all the background work needed to keep a fragmented supply chain working effectively – those are hidden costs in the organisation,” says D’Annunzio. “Think of this concept as similar to that of  turnover; you don’t see an P&L line item named “turnover” but rather those hidden costs show up in increased hiring, training, lower quality, etc. “ 

Alternatively, handing that work over to the logistics provider is a cost saving for the OEM. “When an OEM assigns a supply chain to a single provider, those hidden costs become our responsibility. That allows the OEM to manage disruption while minimising the impact on total cost,” he adds. 

Asset-backed network 

Thanks to its background in ports and terminals, DP World's investments in logistics infrastructure and assets enable it to manage entire supply chains on behalf of OEMs. 

“Our strategy at DP World is to invest where there are critical choke points in the supply chain. Our network of ports, terminals, logistics parks and inland infrastructure gives customers greater control, visibility and flexibility at critical points across the supply chain,” says D’Annunzio. “Where there isn't a strategic advantage in owning assets and capacity is readily available, we'll work with trusted partners instead. That allows us to deliver the most cost efficient solution for our customers.” 

In July, DP World announced investments to develop two new terminals on the UAE's east coast - the Al Rugaylat container and multi-purpose terminal, and the Dibba General Cargo terminal. July also saw DP World enter into negotiations for a long-term lease to develop and operate a container terminal at the port of Corpus Christi in the US state of Texas.  

Beyond infrastructure, the company continues to invest in AI and digital capabilities, assessing where the technology can deliver measurable improvements across its operations. 

What makes the company different, according to D’Annunzio, is that it operates as an integrated global trading partner for its OEM customers, taking the burden of supply chain logistics off those customers at a time when disruption is driving complexity into global trade.  

In an increasingly complex trading environment, resilience is no longer about adding more suppliers or contingency plans. It is about creating connected supply chains with the visibility, flexibility and accountability to keep goods moving. That is how DP World is helping customers build more resilient, connected supply chains.