Opportunity out of crisis
The third paper in the series looking at the inefficiencies in the vehicle logistics and vehicle disposal process.
Reducing the exposure of vehicle logistics companies
If the vehicle industry has hit a storm in the last three years, the finished vehicle logistics (FVL) sector has endured a hurricane. Out of this crisis there is opportunity however, and one of these is the smart use of clever cost saving new technologies.
The hurricane
Since 2008 there has been a huge impact on FVL from weakness in the new and used vehicle markets, especially in the United Kingdom and Europe. As vehicle movements have dropped a key source of revenue for logistics companies has come under pressure.
According to The Association of European Vehicle Logistics, companies in the region have experienced heavy losses, struggled with liquidity problems and have had to rein in investment plans. Large job losses have also been incurred.
The 2010 Automotive Logistics Europe conference report noted that signs for the industry were improving but “. . . pressure on logistics cost would remain.” Responding to these challenges with smart new approaches and ideas was the theme of the event. Companies were urged to examine every part of the vehicle movement process to find efficiencies and improve customer satisfaction.
Managing vehicle inspections is one key area where gains can be realised.
Transport providers exposed
FVL involves a range of players, from the individual (‘hikers’ in the UK context) who operates a casual workforce relocating vehicles, to multinational companies undertaking large scale new vehicle movements regionally and internationally. The contrast between the two extremes couldn’t be more marked, but there is a commonality – the need to operate efficiently and be as transparent as possible about the vehicles they are moving.
This is not a simple task. FVL typically involves a large number of vehicle stock movements, including on and off ships, movements within various holding yards and multiple truck transportations. The staff involved are typically low-paid and low-skilled, and dealing with expensive vehicles, making the incident and cost of damage significant for any transportation company.
Transparency around the state of vehicles being shifted has been a grey area in recent years, but with economic pressure comes greater interest in this area. Auction companies and fleet managers are paying more attention to the state of vehicles being transported as they seek to reduce repair costs and delays in either selling, adding them to a fleet, or defleeting.
Relying on manual or semi-automated inspection processes in this context exposes FVL providers to liability for damage (that may not have even occurred during their care of the vehicle), customer service issues and consumption of management time.
Surely there is a better way?
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