Automotive Supply Chain Issues

Welcome to Time Critical Update, brought to you by Evolution Time Critical - the emergency delivery specialists. Providing you with the information you need to help you keep your supply chain running.

Delays still possible in Asia Pacific while airlines prepare to increase aircraft capacity

As airline capacity in Asia Pacific looks set to grow by five times in the next two decades, many of the world's major airlines have commented on the importance of maintaining a balanced supply/demand equation so as not to reach a situation of ‘over capacity' that may result in reduced yields. The news comes as analysts report an increase in air freight exports from China in the final two months of 2009, leading to a backlog of cargo.

"The lack of sufficient capacity to handle these spikes in demand at short notice can create delays as carriers struggle to move seasonal peaks in volume," comments Brad Brennan, managing director, Evolution Time Critical. "While many regional Chinese airlines benefitted from the upturn towards the end of 2009, it seems clear that carriers throughout Asia Pacific are preparing to better equip themselves for a further increase in demand, although the supply/demand ratio will be kept very lean."

Airbus reports that Asia Pacific airlines are planning to buy 8,000 aircraft worth $1.2 trillion from the company by 2030, which should help to facilitate the export of the increasing number of automotive components being manufactured in the region. Statistics from the China Association of Automobile Manufacturers (CAAM) reveal that from January to August 2009, China's 10,761 auto component enterprises achieved a staggering export volume of $16.6 billion, which is only set to grow in the coming years.

To help its customers overcome problems with moving urgent components from the Asia Pacific region, Evolution Time Critical is using its knowledge and experience to provide creative solutions.

"We recently prevented a £500,000 production delay by shipping 600kg of urgently needed parts from China to Mexico using just a single onboard courier and a network of local contacts to facilitate a weekend shipment," explains Brad Brennan.

Polish MPs approve €12bn for road construction projects in preparation for Euro 2012

As preparations for the Euro 2012 football championship continue in Poland and the Ukraine, Polish officials have announced tenders to build 400km of expressways. The General Directorate for National Roads and Motorways (GDDKiA) is planning to create 1,800km of expressways overall to be operational by 2012, and will invest up to €12bn in road construction and improvement projects. According to GDDKiA statistics, there are currently approximately 500 km of expressways in Poland, with another 400 km under construction and 480 km in the initial stages.

"The road improvements being made in Poland and the Ukraine in preparation for the influx of vehicles expected in 2012 will be of great value to us in facilitating urgent deliveries through Poland by road," comments Steve Risby, European sales director, Evolution Time Critical. "Currently road traffic in Poland can be slow moving. There is a shortage of motorways and many cities have no bypass or ring roads, meaning that logistics companies are obliged to use local roads with a speed limit of 90 km/hour or drive through urban areas, where the speed limit is 50km/hour. This can often cause long delays, particularly in the event of an accident. As the Polish road network improves and traffic can circulate safely at higher speeds, the time taken to transport premium freight through the country will be significantly reduced."

Global intelligence firm predicts increased need for effective risk management and supply chain optimisation in 2010

Global market intelligence firm IDC has released its supply chain predictions for 2010, with risk management and the ‘dynamic optimisation' of smarter, leaner supply chain processes topping the agenda. The IDC's Manufacturing Insights Group predicted that post-recession, companies would need to respond even more rapidly to changing market conditions in order to ensure a robust and efficient supply chain. Although it has been projected before, IDC believes 2010 really will be the year that supply chain optimisation technology meets its promise to further drive out costs and waste. According to IDC's analysts, ‘2010 will be the year that network visibility comes of age'. The group also indicated that risk management will be fundamental to good supply chain strategy, with an increased emphasis on ‘risk awareness and early detection, followed by rapid response'.

"Automotive manufacturers striving to return to higher production volumes in 2010 will need to squeeze every last drop of efficiency from their supply chains without compromising on reliability and robustness," comments Brad Brennan. "The IDC findings confirm our belief that comprehensive contingency planning is vital to maintaining an effective supply chain operation. The increase in demand we experienced for our services in the second half of 2009 bore testament to the fact that manufacturers do not always have robust contingency plans in place to cope with changing market conditions. This can lead to substantial stoppage fees in the event that traditional contingency plans fail to meet new challenges. We recommend that companies review their risk management policies in depth and consider developing relationships with emergency logistics specialists, who can help with this analysis as well as the provision of solutions."

To read the IDC report in its entirety, please visit http://www.scdigest.com/ASSETS/ON_TARGET/10-02-16-1.php?cid=3219

India gears up to meet transport challenge raised by increased component exports

With more Western and Asian vehicle manufacturers setting up production facilities in India and increasing volumes of components being manufactured in the country, delays in transporting components can be experienced where infrastructure is not yet in place to cope with the high level of output. This problem had been exacerbated since September 2009, when Air India suspended its cargo flights to Europe and Japan. Now, the airline says it plans to resume these flights in the first half of 2010, and is also separating its cargo business to form a distinct unit by April 2010.

"While the announcement from Air India is welcome news for logistics operations, we are still monitoring the situation carefully as delays may still be experienced during this period of transition," says Evolution's operations director, Andrew Hampson.

India currently supplies a range of high value and critical automobile components to global automakers. A recent Automotive Component Manufacturers Association of India (ACMA) report revealed the turnover of India's auto component industry was estimated at over US$ 18 billion in 2007-08, an increase of 27.2 per cent since 2002, with even greater growth expected with the increasing automotive production.

European airlines strive to keep operations going despite risk of strikes

As airlines in Europe maintain their strong commitment to countering disruption caused by industrial action, British Airways' senior management is currently locked in discussion with unions to try and avert a strike. In preparation for the impending industrial action, due to take place in March, BA has been training other staff, including pilots, to take the place of absent cabin crew.

In France, five unions representing French air traffic controllers began a strike on 23rd February. The five-day strike is in protest over plans to implement a single air traffic control system in Europe. Spanish air traffic controllers are also threatening an unofficial strike, which would take place over the busy Easter season. Meanwhile, German airline Lufthansa managed to suspend a strike initiated by the German pilots' union after just one day of the planned four day strike.

"These are undoubtedly difficult times for European airlines, who are taking every measure to ensure that as many operations as possible continue without disruption," comments Evolution's financial director Chris Read. "In the unfortunate event of strikes affecting shipments of components, Evolution is on standby to help facilitate urgent deliveries. With our close working knowledge of small regional airports, freighter networks and fast road transport options, we can quickly arrange an alternative means of delivery."

Evolution Time Critical leads premium freight forum at Automotive Logistics conference in Bonn

Car makers, parts manufacturers and logistics companies are coming together at the European Automotive Logistics conference in Bonn from March 2nd-4th to discuss how to meet the challenges brought about by the global economic crisis. Evolution Time Critical were invited to lead a key workshop session on the topic of premium freight. Graham Little, Evolution's business development manager, will lead a discussion centring on the importance of integrating premium freight and emergency logistics into the lean strategies of automotive companies. In particular, Graham will explain how emergency logistics can help to support lean manufacturing strategies and prevent costly line stoppages, while helping to make supply chains more robust. "We're delighted to have been asked to lead this debate, and will be happy to address any questions on the topic before or after the event," says Brad Brennan. "As vehicle manufacturers continue to face the risk of line stoppages due to supply chain disruption, Graham will discuss how time critical emergency logistics can support the automotive industry's return to higher production volumes."

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