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The critical role of supply chain logistics in the automotive industry
The automotive industry was among the hardest hit by the COVID-19 pandemic. It started with a lack of demand due to lockdowns and travel restrictions – and according to McKinsey & Company, the impact was immediate. Auto sales in China plummeted by 71%. By April, sales had also dropped in the US and Europe by 47% and 80%, respectively (1).
This was exacerbated by global supply chain disruptions. As borders closed, planes were grounded. Since roughly 45% of air freight moves in the cargo holds of passenger flights, there was close to 75% less available capacity (2). What capacity was available, especially in the early days of the pandemic, was being used to transport safety materials such as masks, adding to the supply chain slowdowns and backlogs. As a result, airfreight rates skyrocketed in the spring of 2020 (3).
Supply chain challenges persisted well after consumer demand started to rebound. For instance, as it became clear that stay-at-home orders would likely be in place for months, the automotive industry and various tech manufacturers reduced orders of semiconductors as they anticipated a drop in sales. This led to a global shortage of chips that is still lingering today and slowing production (4). The ongoing global supply chain issues have also been a persistent problem for industries, like the automotive sector, that have historically relied heavily on ‘just-in-time' (JIT) supply chain models. With a JIT approach, companies focus on lowering costs and enhancing efficiency by ordering only what they need to meet demand – which works well until supplies can't get through (5).
The key to overcoming any disruption – whether a pandemic, a snowstorm or simply a cancelled flight – is having a reliable, resilient logistics plan in place.
Building a resilient logistics supply chain
Working with a logistics partner who has the industry know-how necessary to handle any challenge is critical as companies begin looking to add agility to their supply chain models. With more than 40 years of experience, that's precisely what Quick delivers.
Our standard operating procedure – ‘expect the unexpected’ – gave us the foundation to help our customers minimize supply chain disruptions during COVID (and beyond). In one case, for instance, a leading European car manufacturer decided to adopt a different strategy for the pandemic than others. They committed from the beginning to keep production on pace with their original sales projections for 2020. This was complicated, of course, by limited air capacity. Quick was able to secure reliable capacity and deliver all the parts needed to meet their commitments.
We could pivot quickly because that’s how we operate every day. Crisis or no crisis, we start with the safest, fastest route for getting a shipment where it needs to be on time. That’s backed by a 'Plan B' and 'Plan C' in case of a delay, for whatever reason. Our global network and long-standing relationships with airlines also mean we have an escalation path already built-in that we can rely on to keep supply chains moving.
The pandemic brought new challenges – sometimes it felt like every day, calling for much more strategy and planning in building resilient supply chains than ever before. That’s where our seasoned operations team and senior management come in. With the longest tenures in the industry, they always think outside the box to solve problems.
Proven technology that provides fingertip access to real-time visibility is also essential for greater supply chain efficiency. That’s why Quick rebuilt what was already the most advanced logistics software platform. Leveraging our years of experience, QuickOnline 2.0 offers a range of new tools to help automate processes, from placing an order to entering details to connecting with us. Fully integrated live airline data also shows current status, delays, actual departures and the aircraft’s position, so customers have enhanced visibility into where their shipments are at all times.
- Hensley, Russel, Maurer, Inga and Padhi, Asutosh (July 16, 2021), How the automotive industry is accelerating of of the turn, McKinsey & Company, https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-the-automotive-industry-is-accelerating-out-of-the-turn
- Heany, Bill and Schenker, DB (August 19, 2022), How air passenger traffic impacts cargo capacity, Aircargo News, https://www.aircargonews.net/freight-forwarder/how-air-passenger-traffic-impacts-cargo-capacity/
- (May 12, 2022), Transforming the automotive supply chain for the 21st century, MIT Technology Review, https://www.technologyreview.com/2022/05/12/1052201/transforming-the-automotive-supply-chain-for-the-21st-century/
About Arno Veldkamp
Head of Client Relationship Management Automotive Europe, United Kingdom
Arno joined the Quick group in May of 2022, bringing with him nearly 30 years of experience in developing complex logistics solutions for the automotive, semiconductor and high security industries. Prior to joining the company, Arno spent more than a decade with time:matters, most recently serving as Global Key Account Manager. He started his career in time-critical logistics with TNT Express. Over the course of his career, Arno has successfully helped his global customer base overcome their urgent logistics challenges with a combination of his creative thinking, pragmatic mindset and results-driven approach.