The automotive industry has had to navigate a lot of challenges over the last few years from Covid-19 – the major cause of the global car chip shortage and Brexit which has added a layer of complexity to the import of vehicles from the EU. Not to mention the rising costs of materials and the demand for electric vehicles.
These challenges mean that automotive companies have had to adapt and find ways to source materials efficiently, manage costs, attract skilled workers, as well as cater to changing consumer preferences. They also need the support of a good freight forwarder and logistics company that act as an extension of their supply chain and ensure the smooth flow of vehicle parts.
Despite the many challenges faced by automotive companies, vehicles remain one of the most imported commodities for the UK. Here are some stats to support this:
- In 2023, the UK imported more than 40.2 billion British pounds worth of cars, the most of any commodity in this year
- Global light vehicle production in 2023 was expected to finish at 89.8 million units
- Europe is expected to produce 17.4 million units in 2024
- For 2024, S&P Global Mobility forecasts light vehicle production levels to decline by 0.4%, to 89.4 million units.
- 71% of imported cars to the UK come from the EU
- The Automotive sector remains pivotal to the UK’s economy, representing 11.8% of all exports of UK manufactured goods in the first six months of 2023 and road vehicles topping the list of the country’s most imported commodities.
What factors are affecting the automotive supply chain?
Finished Vehicles
There is expected to be a more balanced picture between production and sales in 2024, reflecting better balance between supply and demand. Car manufacturers will be looking at ways to ensure they meet timely delivery for their customer.
Adequate protection for digital car parts
Car production is using more digital technologies such as sensors and screens that are fragile and require the right protection during transportation. Some sensors may be sensitive to environmental factors such as moisture or extreme temperatures and will need the right protection to maintain the integrity of the electronic components.
Sustainability
Beyond finished vehicles and auto components, several other factors affect the automotive supply chain. The rise of electric vehicles and environmental concerns have led to a change in the way vehicles are transported.
Companies are exploring eco-friendly transportation methods, emphasising the need for sustainable practices in the automotive logistics sector. Advancements in technology, including the integration of IoT (Internet of Things) and data analytics, play a key role in enhancing efficiency and transparency.
The need for greater visibility
We are seeing the need for greater visibility and real-time tracking in inbound logistics. According to recent industry data, 45% of automotive manufacturers express concerns about the lack of transparency in their inbound supply chains. This lack of visibility can lead to inefficiencies, delays, and increased costs. Implementing technologies like IoT (Internet of Things), RFID (Radio-Frequency Identification), and blockchain can enhance the traceability of materials throughout their journey and ensure a smoother logistics process.
Car chip shortage
The global shortage of car chips is no longer expected to be a source of disruption for vehicle production in 2024, according to S&P Global. However, geopolitical trade risks remain, as evidenced by China’s decision in early July 2023 to restrict exports of some key semiconductor materials.
Customs Clearance for Car & Vehicle Imports
The automotive industry faces several challenges when transporting cars and vehicles across international borders, and Brexit has indeed added a layer of complexity to the equation.
Here are some challenges and considerations that will continue in 2024:
- Customs Procedures and Tariffs
The UK and the EU have distinct customs procedures and tariffs which impact the flow of goods. Automotive companies will need to navigate these new rules and ensure they have proper documentation to avoid any delays at customs.
- Regulatory Compliance
Automotive companies should work with an experienced freight forwarding company who are specialists in automotive logistics solutions to ensure that their vehicles meet the safety and environmental standards of the destination country they are being shipped to.
- Supply Chain Disruptions
Any disruption in the supply chain, whether due to customs issues or other unforeseen events, can have a knock-on effect on the transportation of vehicles. Automotive companies need to plan well in advance, considering the specific requirements and regulations of each country involved in the transportation process.
- Collaboration and Partnerships
Collaborating with reliable transport and logistics partners and customs brokers such as Blacksmith Freight can help minimise delays, keep you informed throughout the process and ship goods in the most cost effective way.
Talk to Blacksmith Freight about your automotive logistics in 2024, and request a quote here >>