AUTOMOTIVE\\\


Covid has been the big story in the automotive market over the past 12 months, says Dan Morgan-Evans, group cargo director at Air Charter Service (ACS). Early last year, car plants around the world shut down as governments imposed lockdown measures. But then, as they gradually opened up again, the services of the airfreight charter specialist were soon required. “We certainly saw a spike in


activity, with everything pushed into the second half of the year,” says Morgan-Evans.


Covid also changed the airfreight


market landscape as space on scheduled carriers


disappeared,


forcing shippers to turn to chartered


freighter alternatives.


“We don’t see that changing this year,” Evans adds. “It will be a while before scheduled services get back to normal, so we’re anticipating a good strong year for air charter.” It could be that, as lockdowns


end and customers start venturing into car showrooms again, there could be another surge in manufacturing and hence


automotive-related airfreight, but it is too early to say at this stage. The car industry is an important


source of business for ACS. Car manufacturers cannot afford to have their vastly expensive production lines shut down, so air charter usually comes into play when there has been some sort of disruption – be it weather, strikes, congestion in ports or on roads or, lately, pandemics. ACS can obtain chartered aircraſt at short notice and fly them between the nearest convenient airports; Birmingham


Logistics is the car industry’s flexible friend


Covid has ensured that it’s been an interesting time in the car making business, to say the least, but this is why sophisticated logistics providers are so important. It’s all about offering vital flexibility, says Olivier Marchegay, Geodis’ global accounts director for the automotive sector. “It’s been a busy year, for sure and


we’ve had to manage the crisis on a daily basis,” he told FBJ. Car makers in Europe and further afield have been cutting output in the face of lockdowns, which have naturally depressed the market. Even if they had wanted to, car makers would not have been able to maintain normal output as the need for social distancing measures in factories has inevitably reduced production.


All this has meant that


Marchegay and the Geodis team have had to be “very reactive with our clients. We have set up a global coordination team to offer solutions, and to be proactive rather than reactive. In fact, my colleagues and I have probably never worked so hard.” Most if not all of these efforts


have had to be made from peoples’ homes, as Geodis itself has put in place social distancing measures. Working from home has been quite pleasant, and the company has some excellent technology available, but Marchegay for one is looking forward to the automotive team getting together in person again, whenever that is allowed. Geodis


handles movements


of components from tier 1, 2 and 3 suppliers to plants in Europe and North and South America as well as automotive spares worldwide. The only sector of the industry it doesn’t get involved in is movement of completed vehicles. (Parent company SNCF - French Railways - used to have an STVA arm which was sold to CAT.) What makes the automotive


sector unique – and fascinating – says Marchegay is that the products it makes are both complex but also made in high volumes. In a way, it combines the huge number of components that might be found in, say, an aircraſt, with the large volumes found in the fast-moving consumer goods sector. But what also makes


Bumpy ride but Cuxport stays on the road


Covid has been the big story in the automotive market over the past 12 months, says Dan Morgan-Evans, group cargo director at Air Charter Service (ACS). Early last year, car plants around the world shut down as governments imposed lockdown measures. But then, as they gradually opened up again, the services of the airfreight charter specialist were soon required.


“We certainly saw a spike in


activity, with everything pushed into the second half of the year,” says Morgan-Evans. Covid also changed the airfreight


market landscape as space on scheduled carriers disappeared, forcing shippers to turn to chartered freighter alternatives. “We don’t see that changing this year,” Evans adds. “It will be a while


before scheduled services get back to normal, so we’re anticipating a good strong year for air charter.” It could be that, as lockdowns


end and customers start venturing into car showrooms again, there could be another surge in manufacturing and hence


automotive-related airfreight, but it is too early to say at this stage. The car industry is an important


source of business for ACS. Car manufacturers cannot afford to have their vastly expensive production lines shut down, so air charter usually comes into play


life interesting for automotive logisticians is the practice these days for car makers to offer a high level of customization. “This is where we come in,”


Marchegay explains. “Today, we are in part also doing assembly of particular modules which we then deliver to the production line. In a way, we act as a buffer for the car maker. For instance, we might assemble a complete tailgate, or maybe door panels, dashboards, roof linings and so on, as well as less obvious items such as electrical harnesses or preparing glass for assembly. Having us doing this sort of operation makes it simpler for the car maker to manage diversity at a later stage of the production process.” This move to push production


further down the supply chain didn’t just happen by chance, Marchegay points out. It was part of a well thought out strategy and the process whereby manufacturers take a thorough look at their supply chains every 2-3 years. Covid has if anything


accelerated change in the automotive


supply chain.


Issue 2 2021 - Freight Business Journal Air charter firm sees spike in automotive activity


is a favourite in the UK, for obvious reasons. Europe and the Americas are ACS’s two biggest areas of activity for automotive. Interestingly, the end of Brexit


transition didn’t cause nearly as big a surge in activity as did Covid, possibly because manufacturers did at least know it was coming and stocked up with supplies and material well before the event. Looking to the future, car making


is clearly set for fundamental change in years to come, with some governments – the UK


Manufacturers and their logistics suppliers are asking themselves: ‘How can I improve my flexibility, how can I manage these higher levels of volatility?’ Marchegay


19


included – saying that they plan to end all production of internal combustion-engined private cars within a couple of decades or so. If there is a need to move Lithium


believes that


the appetite for outsourcing manufacturing in the industry has grown because the process of ‘mutualisation’ – or sharing - of non-competitive activities helps to cut costs and helps optimize resources, while at the same time increasing flexibility. The automotive supply chain is all about teamwork, with every player contributing their specific expertise,


including logistics, of


course. Visibility of the supply chain also


is absolutely key, as is


anticipating potential issues and discussing and offering solutions with the client at an early a stage as possible. The sooner a problem is recognized, the more cost-effective any potential solution can be. Production stoppages caused


by supply chain issues are rare, in Marchegay’s experience, considering the size of the global car industry. Yes, taking on more activities does increase the level of risk for the logistics service provider, “but it is a calculated risk”, says Marchegay. If you have the right processes, the IT, the know- how, it can be effectively managed.


That means having a perfect understanding of your clients’ processes and adopting a culture of continuous improvement and lean management. Cars themselves are undergoing


arguably the greatest single change since Karl Benz first applied an internal combustion engine to a primitive three-wheeled vehicle in 1885, with the widespread adoption of battery electric propulsion. This is beginning to make itself felt in the automotive manufacturing supply chain, says Marchegay. In fact, one of the effects of the


Covid crisis was a threatened stoppage in the supply of batteries from Asia to Europe and the Americas, so the Geodis team quickly came up with alternative services including road, rail and sea solutions. The aim he says, is “to ensure that production did not stop but while minimizing the extra cost.” Solutions included not only


chartered airfreight capacity but even chartered sea vessels from Shanghai to Europe and America. An aſter-market is automotive


batteries is now developing, says Marchegay as well as dealing with expired ones. This does not necessarily mean scrapping them, he adds. Batteries that are deemed to be too old for automotive use


when there has been some sort of disruption – be it weather, strikes, congestion in ports or on roads or, lately, pandemics. ACS can obtain chartered aircraſt at short notice and fly them between the nearest convenient airports; Birmingham is a favourite in the UK, for obvious reasons. Europe and the Americas are ACS’s two biggest areas of activity for automotive. Interestingly, the end of Brexit


transition didn’t cause nearly as big a surge in activity as did Covid, possibly because manufacturers did at least know it was coming


batteries in large quantities that could be a boost for air charter, says Morgan-Evans, as they are banned from the cargo holds of scheduled passenger aircraſt.


can find a new role in, for example, storing energy generated by solar power. In the medium term, batteries


may not only come from Asia, which will mean yet more changes to the supply chain. There are a number of industry initiatives to set up manufacturing operations in Europe or North America – again, these efforts have been given added impetus by the disruption to global transport caused by Covid. As for the post-Covid future,


whenever that starts to come about, Marchegay anticipates that there could be a rapid return to full production. Experience in China, where the Virus is apparently now well under control, suggests that


demand could bounce


back rapidly – indeed, the same effect was seen on a somewhat smaller scale in Europe during the apparent lessening in the number of virus infections seen over the summer. The car industry will however


have to adapt to a socially- distanced future and car plants may not be quite as productive as they once were. “However,” says Marchegay, “as a key component of the team, our job is to anticipate this and propose solutions. It’s our mission to facilitate this value chain by increasing the flexibility of the supply chain.”


and stocked up with supplies and material well before the event. Looking to the future, car making


is clearly set for fundamental change in years to come, with some governments – the UK included – saying that they plan to end all production of internal combustion-engined private cars within a couple of decades or so. If there is a need to move Lithium batteries in large quantities that could be a boost for air charter, says Morgan-Evans, as they are banned from the cargo holds of scheduled passenger aircraſt.


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