UNITED STATES AUTOMOTIVE LOGISTICS INDUSTRY
United States is world`s second biggest auto market and automotive industry plays a crucial role in US imports and exports. It is the third largest automaker in the world with 11.7% of total automobile production, it is also the second largest automobile importer in the world after European Union.
Motor vehicles are the United States’ fourth most valuable export, trailing only aircraft, gasoline and oil, On the import side, passenger vehicles are ranked No. 1 for five consecutive years.
Logistics players provide a wide range of functions this can be classified in the following way:
- Position in the supply chain
a. Upstream Supply Chain
- Order Consolidation: consolidating orders from different vendors of an automaker
- Bulk breaking: distributing orders from one vendor to multiple automakers
- Vendor Managed inventory/ Consignment inventory: fulfillment responsibility lies with the logistics players, for standardized products.
- Clearing Agent: For imports of auto sub components, documentation and transportation activities are taken care.
b. Downstream Supply Chain
- Freight forwarding: Container stuffing at factory premises or loading of vehicles in Ro-Ro carrier from car terminal and export documentation.
- Transport Arrangement: Transport arrangement through Land/ Sea/ Rail for completely built units
- Pre dispatch inspection: inspecting vehicles before transportation of vehicles.
- Order Kitting: Cross docking operation to ship spare parts from vendors to automobile service stations.
- Services that they offer
- Forwarding & Clearing
3. Market they serve
TRENDS IN THE UNITED STATES AUTOMOTIVE LOGISTICS INDUSTRY
- Mexico is ascended to the top spot in vehicle imports to US for a brief period of time in 2020, beating Japan, the gap of imports of vehicles between Japan and Mexico to US is really close with 23% and 22% share respectively, this gap would narrow down with Biden administration in place. This would make Port Laredo taking the top spot for passenger and commercial vehicles export and import from Port of Los Angeles.
- COVID-19 has been a wake call for supply chains, the automakers in US would prefer Mexico and Canada for manufacturing of their sub-assemblies, as these two nations are already building automobile component supply chains for U.S., Japanese, German, Korean, Swedish and other manufacturers.
- One major reason for increase in automobile imports from Canada and Mexico are due to the new free trade agreement between US, Canada and Mexico (USMCA) which are highly likely to continue in the Biden Administration, the following are some key changes that were enacted:
- The revised automotive rules of origin require higher levels of North American content in order to incentivize production and sourcing in North America. Auto vendors have to submit rules of origin for their sub-assemblies and raw materials as well.
- 70% North American steel and aluminum requirements. This is likely to boost the surface transport.
- An increase in the CUSMA regional value content threshold for cars from 62.5% to 75%.
- Stronger regional value content requirements for core car parts, such as engines and transmissions.
- A new labor value content provision requiring that 40% of value of a passenger car (45% for a light truck) be made of materials, parts and labor (including final assembly) produced or carried out by workers in a plant where the average hourly wage is at least US$16
- One strong driver for automotive industry would be Electric Vehicles, as most of the global battery production and Lithium, Nickle, cobalt and graphite productions are concentrated the following trends can be observed in upcoming years:
- Demand for logistics players who can handle hazardous cargo, increase in sea trade to China from Chile & Argentina for Li, from Congo for Cobalt and from brazil for Graphite and Nickle.
- With rise in tensions between Australia and China the Lithium trade would likely see a small dip in demand and logistics players would see a rise in trade between US and Australia for lithium trade.
- Battery supply chain players for China and US would see an increase in demand, these players would be expected of special handling, packaging, transportation and reverse logistics for recycling/ refurbishment.
TECHNOLOGY TREND IN US AUTOMOTIVE LOGISTICS INDUSTRY
- Autonomous trucks would disrupt the road transport. In next two years, “platooning,” a technique to connect wirelessly a convoy of trucks to a lead truck, allowing them to operate safely much closer together and realize fuel efficiencies would feature. In about five years, the next wave, driverless platooning, will take hold. On interstate highways, these platoons will feature a driver in the lead truck and unmanned trucks following close behind. Upon leaving the highway, drivers will resume control of each vehicle.
- Supply chain control towers would make their way to the top spot as a major digital disruptor, as automotive supply chain industry is a global network this helps major automakers like BMW and Mercedes building their control towers integrating their logistics players. Logistics players who can leverage on digital twin would likely gain a lot because this would help in capturing many automotive players.
IMPACT OF COVID-19 PANDEMIC ON AUTOMOTIVE LOGISTICS PLAYERS AND THEIR RESPONSE
- Wallenius Wilhelmsen Group announced it would temporarily lay off 2,500 production employees in the US and Mexico, as they expect sharp drop in demand for US Mexico tradeline.
- The uncertainty facing SIEM and NYE comes as they are enlarging their fleet with the delivery of the first of two deep-sea car carriers fueled by liquefied natural gas (LNG). The vessels of SIEM will handle vehicle shipments exclusively for the Volkswagen Group.
- Baltimore, Brunswick, Jacksonville, and New York/New Jersey have all seen a raise export and import of vehicles though the overall vehicle imports remain 35% lower than last year and he overall exports are down by 32%. High-and-heavy ro-ro also saw a dramatic slide in the first half, down 64 %.
- General Motors is forecasting 45,000 units through Baltimore from South Korea next year. Volkswagen also recently began a new service delivering vehicles through a Port of Baltimore partner facility called Tradepoint Atlantic, a 3,300-acre global logistics center. Volkswagen anticipates bringing in about 120,000 vehicles per year
- The Port of New York and New Jersey is anticipating an extra 35,000 vehicles imported through the port as a result of Japanese manufacturer Nissan’s expansion of short-sea shipping services to New York and New Jersey from Mexico.
- “K” Line said it is planning to cut its car carrier fleet to 71 ships this year, from 85 vessels at the end of March, through a mix of vessel sales, lay-ups, and returning vessels to charterers.
|2||Scope of the report|
|7||Insights from Industry stakeholders|
|8||Cost breakdown of Product by sub-components and average profit margin|
|9||Disruptive innovation in the Industry|
|10||Technology trends in the Industry|
|11||Consumer trends in the industry|
|12||Recent Production Milestones|
|13||Component Manufacturing in US, EU and China|
|14||COVID-19 impact on overall market|
|15||COVID-19 impact on Production of components|
|16||COVID-19 impact on Point of sale|
|17||Market Segmentation, Dynamics and Forecast by Geography, 2021-2026|
|18||Market Segmentation, Dynamics and Forecast by Product Type, 2021-2026|
|19||Market Segmentation, Dynamics and Forecast by Application, 2021-2026|
|20||Market Segmentation, Dynamics and Forecast by End use, 2021-2026|
|21||Product installation rate by OEM, 2021|
|22||Incline/Decline in Average B-2-B selling price in past 5 years|
|23||Competition from substitute products|
|24||Gross margin and average profitability of suppliers|
|25||New product development in past 12 months|
|26||M&A in past 12 months|
|27||Growth strategy of leading players|
|28||Market share of vendors, 2021|
|30||Unmet needs and opportunity for new suppliers|