A severe slump in car sales on both sides of the Atlantic is testing storage capacity at ports and is threatening to curtail production across the industry.
In the UK, an “exceptionally weak September market” for new car registrations reported by the Society of Manufacturers and Motor Traders (SMMT) has had a direct impact on port operators, with vehicle storage reaching full capacity.
Figures released this week show that registrations in the UK fell 21.2 per cent last month to 330,295 units (against a 9 per cent across Europe). It is the fifth month in a row the market has fallen, prompting the SMMT to ask the government for immediate action to restore consumer confidence to avoid long-term damage to the manufacturing industry.
The impact on manufacturing is already being felt as carmakers in the US and Europe slow production, but is ironically coming as something of a blessing to port operators as terminals have become swamped with unsold vehicles. Portbury in Bristol is a transhipment and export point for vehicles to many countries, including Ireland (which showed the biggest fall in European sales in September). The 600 acres of finished vehicle space at the main terminal is filling up, as is additional storage at nearby Avonmouth. “We haven’t got any extra storage space but we think we’ll be able to accommodate everything we need to within the space, given that the manufacturers have slowed down production,” port spokesman Tony Dent told Automotive Logistics.
“In terms of logistics, the situation is not that drastic,” said Dr Matthias Holweg from the Judge Business School, adding that UK ports should be able to cope with surplus stock. “I would expect some cost-down pressure [for LSPs], but even though production may be reduced by 20-30 per cent… I would not expect major structural change in the supply chain,” he said. However, he did point to the importance of the US sales to the UK industry, particularly Midlands-based carmaking.
The US is experiencing a steep downturn that is affecting the leading carmakers including Toyota, which saw North American sales plunge 32 per cent last month. According to Autodata, Toyota was holding 67 days of supply inventory at the end of September, nearly double what it usually has. The Japanese carmaker was followed by Chrysler with 85 days of inventory and Ford, which was holding 97 days’ worth. With no one buying the cars, the question is, where do they all go?