How automotive logistics can empower Asian manufacturers on a global scale

How automotive logistics can empower Asian manufacturers on a global scale

Glen Hilton, CEO & MD, Asia Pacific, DP World | Glen Hilton

Asian countries have long held dominance over the finished vehicle export market. South Korea and Japan, for long the leaders in this industry, have now been surpassed by the new powerhouse – China.

China manufactures 21.4million passenger cars every single year. Outside the continent, Germany is the only country that comes close to this scale at 3.1million. The entire Asia region sets itself apart from the rest of the world with an insatiable drive for innovation and growth, which will help it deliver on the increasing demand for cars worldwide – particularly as we shift towards electric vehicles. 

There are a few reasons for the region’s dominance in the field. First of all, China’s government have introduced a number of policies to boost car manufacturing and demand in the country – such as a cut in vehicle purchase tax and incentives for electric vehicle production.  Many of the continent’s manufacturers are multipurpose, making individual components as well as the finished vehicle, and exporting these products around the world. Another is that nearly all car parts are manufactured en-masse somewhere locally. This setup provides a basis for Asia’s scale, efficiency, and value that other economies struggle to compete with.

However, the fundamental reason for Asia’s meteoric rise in all things automotive is its logistics network, supported by state-of-the-art ports that have quickly adapted to the growing number of vehicles being shipped from Asia to satisfy global demand. 

Driving automotive trade

With many Asian automotive manufacturers targeting expansion beyond the continent, it’s vital that these companies have reliable, fast and cost-effective routes to new markets - even more so as demand for new vehicles continues to grow across the globe. 

As a result, more sophisticated, technologically advanced car-handling terminals are needed. After all, with car manufacture market share on the decline throughout Europe, and North America’s market remaining largely domestic, building a supply chain infrastructure that can facilitate Asia’s automotive manufacturing industry has become a global imperative.

Our global portfolio has 16 terminals that accommodate ‘roll-on, roll-off’ (RoRo) vessels, through which around two million finished vehicles are moved every year. But it’s not just enough to have RoRo capabilities. Our ports & terminals must adapt with the latest technologies and our customers’ need for real-time data. 

This thinking has influenced investments at our Batangas terminal in the Philippines, the market leader for finished vehicle imports to the country. It plays a pivotal role in distributing cars to the vast Philippine Archipelago, handling 80 percent of finished vehicle imports to the country.

Batangas' capacity, connectivity and agility make it a one-stop-shop for car importers. Its dedicated RoRo berth, state-of-the-art multi-level parking facility, pre-delivery inspection points and value-added services work together seamlessly, coordinated by its terminal operating system: CARGOES TOS+. This centralised software synchronises all moving parts of the terminal, from gate entries to cargo and staff movements. Such sophisticated technology also gives everyone from manufacturers to importers oversight on the journey of their goods. Given the instability of the automotive supply chain in the wake of the Covid-19 pandemic, total supply chain visibility is invaluable. 

Accelerating global growth

However, to truly utilise the benefits of this technologically advanced port model, manufacturers need a full network of them. No matter how strategically located a next generation terminal may be for the likes of automotive giants like Kia, Toyota or Nissan, the efficiencies cannot be experienced throughout the supply chain if other terminals haven’t adopted the same digitalisation.

We seek to maintain trade flow throughout our import and export network by doing exactly this: replicating the successes we’ve seen in our Asian ports on a global scale. This effort feeds into our broader strategy as a business, introducing greater automation and visibility to trade to create value for manufacturers and consumers alike. 

Already, for example, our Saigon terminal in Vietnam is beginning to adopt the same terminal operating software used by Batangas, elevating the port’s capacity overnight. In fact, when grouped together with our global RoRo portfolio, Saigon’s modernised capabilities enable it to handle over 50% of Vietnam’s annual complete built-up (CBU) vehicle market share. DP World’s SPCT (Saigon Premier Container Terminal) is the only terminal handling RoRo vessels in the south of Vietnam, catering to the major catchment area of Ho Chi Minh city. Winning the contract for Toyota Motor Vietnam in 2022 to carry out the pre-delivery inspection services within the terminal is a testament to SPCT’s pivotal role in the finished vehicle supply chain for the country. 

As end-to-end specialists, we don’t evolve our terminals regionally – we evolve them globally. We are using these same methods at our ports in emerging economies, such as those in South America and Africa, enabling the communities in these areas to tap into the ever-growing automotive boom and synchronising our entire global portfolio. DP World in Puerto Central and Lirquen, Chile, are testament to this, handling a combined total half a million of imported vehicles annually – a figure which could easily increase thanks to the infrastructure and technology behind their leading operations. The twin ports in Chile complement each other by providing alternate gateways and thereby business resilience for importers in the country. DP World has consistently expanded its terminal asset portfolio to cater to the growing supply chain needs of finished vehicles. For instance, Sokhna in Egypt started handling car-carriers and providing the fastest gateway for Asian imports via the Red Sea instead of crossing the Suez Canal. Similarly, DP World’s Luanda facility in Angola recently started catering to car-carriers serving the country. And our flagship port in Jebel Ali remains a strong hub for the automotive supply chain for the whole of the Gulf and the Middle East.  

So, for Asian manufacturers, choosing the right logistics supplier that gives them total end-to-end visibility wherever they export to in the world is critical. DP World’s portfolio of terminals, complemented by its logistics arm, provides a one-stop-shop for the finished vehicles global supply chain.

Steering Change

Asia’s dominance in all things automotive has been evident for a long time. However, the infrastructure supporting the accelerated growth in China, Vietnam, South Korea and the rest of Asia is what we should be learning from if we’re to support the industry and better serve all economies. 

Our end-to-end view of the world’s supply chains gives us a unique insight into industry trends, highlighting the innovations that promote the flow of goods and services. 

Indeed, Asia is a leader in automotive manufacturing. But from what we can see, its influence in transforming the global supply chain is the real driver of its success in the industry. Applied strategically, everyone can benefit from the region’s continued automotive growth too – and we are here to support it.

The article was first published in Automotive Logistics.