The overriding message from this year's Automotive Logistics Global conference held last week was that greater collaboration is paramount to drive waste, and therefore cost, out of the supply chain. As 250 global industry leaders from car manufacturers, tier one suppliers and logistics service providers gathered in Detroit, all agreed that the automotive sector is facing a tough year.
Two leading players in North America's automotive market, Frederiek Toney of Ford and Peter Weiss of Chrysler emphasised that this is a market environment that demands innovation and partnership to drive waste out of the supply chain. “In a time when cash flow is a problem, we can no longer afford to carry 70 days' supply of vehicles, for example,” said Toney. “The current market has spurred interest in collaboration as never before.”
One of the key topics of discussion was improved collaboration between car makers and rail providers. Julie Krehbiel, vice president and general manager at Union Pacific Railroad, profiled one of the most concrete projects that has emerged over the last year – a co-loading rail lane operated by Union Pacific and Norfolk Southern, moving Chrysler and Ford cars from Detroit to Los Angeles. The success of the project has surprised even Krehbiel in two ways: running along one of the busiest corridors in the United States rather than a niche lane and the efforts had improved transit time by 20 per cent, as the two car manufacturers were able to fill up trains faster and reduce dwell time. The conference saw several carmakers express interest in seeing more shared tracks and facilities between the railways in particular.
With climate change topping the global agenda, it also formed an important part of this year's conference. However, despite positive economic value – three million fewer truck miles, 480,000 fewer gallons of fuel and 4,900 fewer metric tonnes of C02 – achieved by Honda through integrating its inbound network and designing cross-docks, common feeling amongst the delegates was that going green would only be the way forward once it was cheaper.
This year was the first time a poll was undertaken to gauge industry opinion. The results showed that car market sales are the biggest challenge facing the sector right now, with 62 per cent of delegates believing that logistics service providers need to find synergies to better support their customers. With going green another important discussion point, over 80 per cent of delegates believe that the industry is not ready to pay to improve their green credentials.
The conference marks an interesting turning point in automotive logistics, as the economic downturn, rising fuel costs and increased globalisation all take effect. However, delegates still sounded a positive note, and Ford's Toney emphasised that the difficult market today is eliminating waste that would not return when sales came back and that car manufacturers and logistics provides must work tirelessly together to find win-win scenarios.