How trade shifts are reshaping FVL strategies

The landscape of finished vehicle logistics is being influenced by trade changes, the rise of technology such as AI, sustainability and EVs, and the compliance stipulations that comes with these. Tariffs are influencing FVL in North America and worldwide, while Europe is pushing ahead with alternative fuels and electric trucks to try to meet ambitious emissions reduction targets.

As a result, the FVL market is constantly in flux, but these changes can be used as opportunities to gain a competitive advantage in the network – something that will be discussed more in our upcoming livestream featuring Peter Hörndlein, head of vehicle logistics at VW Group Logistics.

Tariffs and shipping route disruptions affecting FVL changes

The ongoing trade actions being made by the Trump administration are having a rippling effect throughout the North American supply chain and finished vehicle logistics market.

While these are sure to continue, and longer-term effects remain to be seen, the short-term problems have already been apparent in most modes of vehicle logistics.

Shipping was almost immediately affected by the US tariffs, with port congestion worsening right before the so-called ‘Liberation Day’ tariffs were implemented in April, including a 25% tariff on imported vehicles (or 27.5% for non-USMCA compliant vehicles). A surge in vessel movements, bound for the US from Europe and Asia, was recorded in March as OEMs rushed to get vehicles over the border before the tariffs hit. Ports in LA, Long Beach and Savannah reported an uptick in congestion. Many vessels that didn’t make it in time were rerouted, adding to the shipping line chaos while prices rose. Ports faced congestion and logistics providers felt the strain of the influx of cargo, disrupting the standard vessel movements in the vehicle logistics chain in North America and the ports of origin in the likes of the EU and Asia.

VW Group Logistics launches Venice port terminal to optimise exports, reduce emissions and improve resilience across vehicle logistics

Volkswagen Group Logistics will expand its port network for finished vehicles of the Volkswagen Group with a terminal at Venice port in Italy, which will reduce lead times for many plants, increase rail transport, and shorten shipping times with Asia.

In the longer-term, FVL is likely to face trouble from the tariffs as OEMs take a financial hit, and potentially adjust their output as a result. Some OEMs may shift production to the US to avoid tariffs, or lean more on their current US bases, such as Ford, GM and Stellantis, while others may decide to pause exports to the US, like we saw JLR and VW Group temporarily enact. Either way, the effect on the vehicle logistics network will be felt, and increased communication, transparency and visibility will become even more crucial between OEMs and logistics providers.

We have seen some OEMs begin to strategically redesign their vehicle logistics networks to help combat these external disruptions, and it could signal a future trend in FVL. Last month, for example, VW Group Logistics announced it is expanding its port network for finished vehicles with a terminal at Venice port in Italy – a move that will reduce lead times, increase intermodal transport, and shorten shipping times between Europe and Asia as global routes evolve in light of the tariffs.

Peter Hörndlein, managing director of vehicle logistics at Volkswagen Group Logistics, who will be speaking in our upcoming livestream, said that the strategic move will also help achieve emissions reductions. “We will be able to bring cars directly to the Mediterranean and from there move them to Asia, leading to shorter transport distances from the factories to the port, which improves the lead times and reduces the CO₂ footprint,” he told Automotive Logistics at the time.

Road and rail routes shift priority as VPCs get busy

While it’s not yet clear how the tariffs have influenced road and rail flows, and where congestion and bottlenecks might build, the fluctuations are already affecting vehicle processing centres (VPCs).

According to perimeter security solutions provider Amarok, VPCs are experiencing delays and increased costs due to the tariffs, as unexpected shifts in flows and volumes are making operations more difficult. Vehicle dwell times are increasing and lots are overflowing, leading some OEMs to explore the establishment of Free Trade Zones (FTZs), according to Amarok.

FTZs can be used to help defer, reduce or eliminate import duties for vehicles, improving cashflow and flexibility as carmakers examine what the latest tariffs and trade updates will mean for their supply chains. However, setting up and gaining approval for these FTZs can be difficult and costly, and adds more compliance regulations that the industry has to keep up with.

Digital tools can be used to gain better visibility over multimodal movements, which will become more important as road and rail vehicle logistics fluctuate, but these also need talented people who are trained in using the tools. Nissan North America and GM previously stressed the importance of digitalisation in FVL, particularly in strengthening partnerships with logistics providers through providing better communication and more reliable forecasts, something which Mercedes-Benz’s director of worldwide transport Anouck Arnaud also highlighted recently. Uncertainty following the implementation of tariffs has led to changes in prioritisation for production and distribution at different plants.

FVL Livestream: Turning trade changes into network gains

Automotive Logistics will be discussing the FVL market and how to turn trade changes into network gains in our upcoming livestream, taking place 16 July at 15:00 BST (10:00 EDT, 16:00 CEST).

The livestream will include analysis on tariffs and production from AutoForecast Solutions, and VW Group’s head of vehicle logistics Peter Hörndlein on optimising the OEM’s European network with new operations at the port of Venice.

Register for free for the livestream here