Automotive logistics comprises inbound procurement, outsourcing & distribution of spare parts, and transportation of finished vehicles domestically or internationally. The automotive and component manufacturers are facing pressure concerning their final products to be delivered to the dealers in the minimum time. The logistics companies are integrating their services with enhanced technologies, allowing the manufacturers to track their shipments and lead time. Further, the growing production of vehicles across the globe is stimulating the growth of the automotive logistics market.
Factors Bolstering the Demand for Automotive Logistics
The rapid adoption of software-based systems by automakers to manage logistical processes has been delivering substantial benefits, such as increasing supply chain transparency and operational efficiency. For example, General Motors was an early adopter of the Outbound Logistics Software. During the pandemic-induced crisis, the software (including onboard asset telematics and geofencing technology, and others) delivered considerably better visibility in-vehicle delivery, improved truck utilization, and ramped up deliveries to dealers. Thus, the burgeoning digitalization of operations is augmenting market expansion.
Globally, several regions are investing in this potential market, but in Asia Pacific, automobile manufacturers pose significant business opportunities for automotive logistics providers. China, the most effective vehicle manufacturing country in Asia Pacific, produced 27.8 million vehicles in 2018, showcasing the demand for automotive logistics in the country. Chinese automakers export their vehicles to several countries, including Afghanistan, Brazil, Chile, Egypt, the Philippines, Russia, and Saudi Arabia. The rising demand for Chinese manufactured vehicles in these countries is increasingly pressuring Chinese automakers to partner with logistics companies. Also, South East Asian countries are anticipated to create several opportunities for automotive logistics players to gain profit.
The advent of smart technologies and autonomous vehicles is boosting the automotive logistics market. Cloud technology is one of the leading technologies projected to furnish the logistics companies growth in the coming years as it provides various benefits to the transportation company. Another significant technology is autonomous vehicles in the industry. The autonomous vehicles segment, particularly the passenger car segment, has been gaining popularity recently, and numerous automobile manufacturers are testing autonomous trucks.
Rising Trend of Finished Vehicle Logistics
With the rising vehicle production, logistics service providers aim to create better automotive logistics operations. Hence, the logistics service providers are implementing finished vehicle logistics (FVL) services to control logistics operations better. Finished vehicle logistics is used for the safer delivery of cars, resulting in increased efficiency in finished vehicle logistics and increasing the demand for automotive logistics.
FVL operations help attain real-time vehicle location data and analytics, obtain complete control over vehicle movement for logistics service providers, and decrease costs and errors linked with legacy technologies, such as manual scanning and radio frequency identification (RFID). The activities included in FVL service comprising storage and post-production modifications, such as technical issues and pre-delivery inspections that consist of various tests carried out prior to the finished vehicle’s delivery to the customer.
Applications of Automotive Logistics
Automotive outsourcing logistics companies provide third-party services such as contract logistics, warehousing, and domestic transportation to achieve maximum efficiency in the transportation and manufacturing process. The use of advanced WMS, integrated supply chain, TMS, and disposable & returnable packaging solutions are the essential logistics services that maintain the balance between demand and supply of automotive.
Automotive logistics are majorly used in the transportation industry as the logistics players providing transportation management services own core freight forwarding competencies and offer extra value-added services. It acts as an intermediary that arranges domestic and international transportation between its customer and transportation provider. Various companies such as DHL Group uses SmartTrucking to meet the customer’s changing demands. Dionisio takes another development in the field of automotive logistics. Dionisio, a ship for automobile transport, is docked in Mazatlan, Sinaloa, and is responsible for transporting 4800 Mitsubishi vehicles from Japan to Mexico. Automotive players are using advanced transportation services to ensure on-time delivery of automobiles.
Market Players and Their Potential
CEVA Logistics AG, DHL International GmbH, GEODIS, Nippon Express Co., Ltd, Ryder System, Inc., XPO Logistics, Inc., and United Parcel Service of America, Inc. are some significant market players in the global automotive logistics market. In order to hold a higher place in the automotive logistics market, these players are adopting strategies such as mergers and acquisitions, partnerships, and other market initiatives. The increasing number of partnerships among automotive manufacturers and logistics companies positively leads to market growth.
Also, new product innovations have emerged as the latest trend gaining popularity in the global automotive logistics market. Following are a few examples of these:
- In January 2021, CEVA Logistics accelerated its African expansion by acquiring ASTI Group in Morocco.
- In September 2022, Bahri Logistics, a business branch of the national shipping carrier of Saudi Arabia, and the MOSOLF Group, major system service providers for the automotive industry in Europe, declared the signing of a Memorandum of Understanding (MoU) aims to develop an automotive logistics framework in Saudi Arabia and the Gulf Cooperation Council (GCC).
- In March 2021, Tata Motors launched Ultra Sleek T-Series trucks based on smart truck technology.
- In June 2021, JLR (Jaguar Land Rover) inked a 5-year agreement with Unipart Distribution to control its worldwide parts logistics center in Appleby Magna, England.
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