News / China offers European forwarders automotive logistics opportunities

© Emmanouil Pavlis

Europe’s automobile market might be in the doldrums, but there are plenty of opportunities for logistics service providers to support Chinese OEMs.

Trade body the Association of European Vehicle Logistics (ECG) has drawn its members’ attention to this growing marketon which more and more vehicles are being sold across the continent.

European automakers’ loss of output has been estimated at 5m vehicles a year, compared with the peak period of 2017/2018.

However, imports of Chinese vehicles to Europe continue to grow strongly. In Q1, the UK was the leading market, generating sales of 15,841 units, a year-on-year increase of 59%, followed by Spain, with 14,284 units (+173%), and Italy, with 12,522 (+80%).

According to projections – an indication of China’s emergence as a vehicle manufacturing powerhouse – by 2026, 35% of all electric vehicles in Europe will be of Chinese origin.

ECG VP Mark Hindley confirmed to The Loadstar comments he made at the association’s Spring Congress that Chinese automakers “want to move really quickly, and they don’t have time to create their own supply chains”.

He added: “They need to rely on the existing structures and facilities. That’s where our members can make some good ways forward.”

He went on to highlight that, despite their ‘vertical’ logistics approach, for example, having their own car-carrying vessels, Chinese OEMs would need to collaborate with shipping companies that operate in Europe to deliver their vehicles to the market.

“Chinese OEMs want the efficiency of very big vessels, but those very big vessels don’t fit into many [European] ports. For them to create the infrastructure is difficult, because you have to have deepwater ports. And I can speak specifically about the UK, where there are only really two ports that can handle these vessels. So, they need to work with us to find access to the market.”

Mr Hindley said many ECG member companies were already working with Chinese automakers, collecting vehicles from ports and delivering them to dealerships.

BYD, the ‘Chinese Tesla’, which is scheduled to open its first European facility in Hungary in H2, already has a network of LSPs providing storage, pre-delivery inspection and services, he explained.

“It’s likely that outbound volumes from the new plant in Hungary will be delivered by LSPs based in the region.”

The prospect of other Chinese automakers establishing their own manufacturing plants in Europe, coupled with their tendency to adopt a vertical end-to-end logistics approach, raises the question that, in time, they could take finished vehicle logistics (FVL) provision in-house.

But, he explained: “Certainly from the outset, Chinese OEMs will rely upon incumbent LSPs for  vehicle handling capacity and delivery networks, and I expect this to continue in the medium term.

“Their longer-term strategy isn’t yet fully known and may involve some investment in-house.”