News / European forwarders set for a bumpy ride in automotive logistics, says Ti

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The shift to electric in the automotive sector is harming European forwarders and car-carriers, while Chinese and US players could be in for a smoother ride, according to Transport Intelligence’s (Ti) chief analyst, Thomas Cullen.  

Ti’s report analysing the transformation of the automotive logistics sector reported that China has become one of the most important economies in both global automotive production and consumption.  

It found that automotive production in China is now in excess of 30m vehicles per year, with some 9.5m of these in 2023 being electric vehicles (EVs). 

This is largely down to state-owned enterprises (SOEs) “shifting their focus away from internal combustion vehicles and onto electric vehicles”, in combination with heavy investment in battery production. 

While the marketing focus of Chinese production is largely domestic, and the supply chain for Chinese SOEs “is overwhelmingly based in China”, significant investment has meant China has “a surplus of production capacity”, leading to a growing export market. 

Provisions to enable this export growth, including investment in several fleets of car-carrying vessels, have been “considerable”, found Mr Cullen.  

He noted that this growth also somewhat applies to logistics service providers (LSPs) in China, most of which are part of the SOE group producing the vehicle. 

Meanwhile, prospects for the European automotive sector are “depressing” as the region remains “stuck between mechanical internal combustion vehicles and new technology”.  

“The impact of this situation is serious for the automotive logistics sector,” warned Mr Cullen, as he pointed to the “major threat” of plant closures.  

“This obviously would be a threat to the LSPs serving those plants,” he added. 

Indeed, several prominent German LSPs “are no longer as dependent on the automotive sector as they once were”. Rhenus, for example, has diversified over the past decade, whilst DB Schenker and DHL Supply Chain “have simply grown in other areas”.  

Mr Cullen’s analysis therefore predicted that, at a European level, it will be the smaller LSPs and European-based car-carrying shipping lines who will suffer the impact of change. 

In North America, the report found that the condition of the automotive sector “is not quite as severe as that in Europe, but it is in a state of turmoil nonetheless”. 

This is largely due to Tesla, one of the largest manufacturers of EVs, producing the majority of its products in the US.  

“The LSP base for the automotive sector in North America is not necessarily distressed. Volumes are reasonable and supply chain developments such as the expansion of production in Mexico are creating opportunities,” said Mr Cullen. 

“Change in the automotive market is likely to be less brutal in North America than in Europe and this will probably be reflected in the logistics sector,” he added. 

But while this past decade has been pivotal in shaping the automotive supply chain, the report emphasised that the transformation “is only just starting”. 

It explained that the past year has seen “a good deal of pain” for much of the automotive sector, but the future is less clear. 

Quite, a heating up trade-war could dramatically shift the supply-chain landscape in this sector. Notably, the incoming and already imposed tariffs set by the US and Europe against Chinese electric vehicles could stunt China’s exports and expedite domestic growth.  

“Overall, the market for automotive logistics looks to be a tough one… The continued lack of profitability of legacy vehicle manufacturers [is] spreading to their logistics suppliers… The trend towards electric vehicles remains a threat and it will be interesting to see if any major LSPs in this sector withdraw as a result. 

“The impact of change on automotive logistics will be total,” Mr Cullen concluded.