Opportunities for auto logistics firms: report

The automotive logistics industry has endured a catastrophic meltdown in volumes over the past year. Logistics companies are struggling to deal with the consequences of a slump in production and sales, and many – especially in the finished vehicle logistics market – have gone out of business, says the report from Transport Intelligence. According to the report's analysis, the next year will be critical for logistics companies to come to terms with the systemic re-structuring which the industry is undergoing. The report highlights the state of the US market, in which General Motors and Chrysler have been bankrupted and Ford's production capacity severely compromised. In contrast, Hyundai, Volkswagen and Daimler are opening new plants and Toyota, Nissan and Honda are likely to expand production at existing facilities. This will mean that while traditional car making regions such as Detroit undergo savage rationalisation new ones, such as the southern states of America, will boom. In Europe, the market is still very fragmented although there are no signs that there will be consolidation any time soon. However the German power house producers in particular will have to migrate from their existing locations in Western Europe, to lower cost production locations in the east of the region. Looking beyond China's inevitable rise to becoming one of the world's dominant car markets, there is also a huge degree of excitement about other developing countries. India is growing fast, and as a consumer market, has enormous potential. Thailand will become an important production location, as will South Africa, due to the fragmenting nature of the world's production footprint. According to the report's author, chief analyst, Thomas Cullen, it will be essential for major logistics companies to ensure that they choose the right markets, and partner with the vehicle manufacturing stars of the industry, rather than those mortally wounded by the downturn. "The financial crisis has accelerated a root-and-branch re-structuring which has serious implications for the automotive logistics industry. Although many providers are failing, there will be opportunities for those with global scale and the agility to respond to changing customer needs. In fact many of the largest logistics service providers could do quite well in the long term, but first they have to survive a market downturn unparalleled in its ferocity."