The automotive industry is investing to decarbonise the vehicles it makes as well as individual links in the supply chain used to deliver the parts and finished vehicles. However, without better logistics planning there will still be a lot of waste and the industry needs to join up its thinking, said Martin Corner, head of supply chain at Volvo Cars, on a recent panel discussion about shipping in the automotive industry.
The automotive industry is being squeezed from the outside by regulations to reduce its emissions, and like an increasing number of automakers, Volvo is making sustainability a key part of its RFQ process.
However, Corner also said that the solution for making logistics more sustainable does not necessarily lie in the technology solutions, because scaling up the investment in the technology is costly and may impact the cost of the final product.
Instead, the industry needs more long-term strategic partnerships and needs to take a lot of the competition out of the short-term RFQ cycle.
“In the automotive industry we’re not good at collaborating and sharing, and working together on best practice,” said Corner. “The way I see this evolving is that the environmental pressure is going to be the first thing that forces us to put competition to one side and collaborate together throughout the whole value chain. For example, by lobbying the EU on infrastructure and investments in green technologies and transport corridors.”
He explained that competition creates waste and double work, which is inherently bad for sustainability.
The industry should of course grasp the quick wins through technology if there is any ‘low-hanging fruit’, but Corner said that it’s a constant battle to offset sustainability with affordability, lead time and other aspects. What is really necessary is investment in the infrastructure, transport modes, and a redesign of the global supply chain footprint. This may involve reconsidering decisions to produce vehicles far away from where they are sold to consolidate manufacturing operations and limit tooling investments. As environmental concerns become more dominant, those efficiencies may no longer make sense.
Collaboration across the supply chain
What is also necessary is for companies to work with all links of the supply chain to align the network. A first step is to have better visibility of policies and initiatives within the supply chain, something which logistics experts at the recent Automotive Logistics and Supply Chain Europe Live conference agreed is still sorely lacking. Better collaboration will also require trust, he said, with open-book costing and long-term partnerships instead of short-term RFQs.
When it comes to reducing emissions on the sea, better alignment within the supply chain may mean slower speed, or slow steaming, is more viable. However, making ships sail more slowly normally upsets the delicate balance of the supply chain. On the same conference panel, Glenn Edvardsen, CEO of UECC, said that the shortsea provider is happy to take all the time it has to ship cars with lower fuel consumption, but that OEMs generally want vehicles delivered as soon as possible.
However, according to Corner and Marc Adriansens, managing director of International Car Operators, the terminal operator in the port of Zeebrugge, things may be moving towards slowing sea transit down a little, as other elements make the process more efficient.
ICO has moved more into car preparation onsite, to allow them to be shipped to dealers and even end customers directly, which avoids having to transport the cars to an inland compound first. Adriansens added: “I think terminals give a little bit more stock control.”
Corner added that more B2C sales would provide the opportunity to reduce stocks: “If at the further end we’ve got the right stock that’s moving at the right velocity because we’ve got a good cadence of demand pulling our supply, there’s an opportunity to slow down, but [also to] have a more accurate pipeline of products moving towards the market.”
An additional support comes with Volvo’s efforts to use certification to share products across markets so that cars can be easily diverted to alternative markets if the demand requires it.