Thinking outside the box is generally applauded, but thinking inside the box is becoming increasingly common. And no, I’m not only talking about the UK government’s unimaginative strategising as the nation stumbles towards Brexit (more on that later). Where once ro-ro transport was the undoubted method for moving finished vehicles, containerisation is increasingly becoming a viable option as the industry decentralises its production and also shifts towards different types of vehicles, including electric ones.
As our in-depth report explains, containerisation can be especially useful on routes that lack regular ro-ro services or good security by truck or rail, and for second-hand or damaged cars, or semi-knockdown kits where final assembly overseas avoids either poor quality or high tariffs, or both. It is also a reasonable option for electric vehicles because these tend to be transported in smaller volumes and in less regular shipments – for now, at least. Since around a quarter of the world’s estimated 39m containers are running empty at any one time, filling them with vehicles would also be an excellent way to reduce waste in the global logistics network.
“Essentially, any lane where ro-ro is not the ideal solution, because of various factors such as cost, multiple transhipments or handovers, transit time, infrequency or critical mass, containerisation with racks makes sense,” says Christoph Seitz, co-owner and CEO of CFR Rinkens, an international third-party logistics provider that currently makes 95% of its revenue from containerisation and handles outbound logistics for Tesla.
Looking at the different factors involved, certain regions of the world appear ripe for increased containerisation. One of those is China, previously a massive if largely self-contained market that is now seeking to establish itself as a major exporter of vehicles. A key economic (and political) programme, the Belt and Road initiative has seen it pour resources into large-scale infrastructure projects linking east and west, causing some controversy along the way as concerns grow in western Europe over greater Chinese influence. In fact, Belt and Road recently took a significant new twist as Italy became the first member of the G7 developed economies to sign up to the scheme, potentially opening up “the soft underbelly of Europe”, as one sceptical commentator put it.
Europe already has enough to worry about, politically and economically. Although by no means the only major challenge facing the region, one key concern is the as-yet-undecided future relationship between the EU and the UK, which voted to leave the bloc in 2016 but has spent more than two years debating the terms of its departure. At the time of writing, immediately before the official date for departure (March 29), there was still no clarity on trade relations – or indeed any other type – between the two parties, and businesses were unsure whether to brace themselves for no-deal, a lengthy extension or a last-minute agreement.
For their part, automotive companies have already made arrangements for stockpiling, strategic shutdowns, customs preparation and other contingency planning, but all would surely like to know, finally, what kind of environment they will be trading in over the coming years.
But in terms of finished vehicle movements across Europe, the current status seems to be more positive than at other points during the past 12 months, according to our survey of the top vehicle-handling ports. Last year saw a capacity squeeze exacerbated by the new Worldwide Harmonised Light Vehicle Test Procedure, which caused fluctuations in distribution patterns and an urgent need for more storage space. But multiple European ports have now invested in infrastructure and new digital technology that will help to ease throughput and security.
While there is likely to be some disruption from Brexit, including delays and backlogs (and higher costs), the overall finished vehicle logistics network is well developed and will doubtless survive the impact. In fact, after a lengthy period of discontent and in-fighting, departure may come as a relief.