Asian Auto Production Fuels 3PL Boom, DHL Says

Asian demand for new cars and increased sourcing of parts from China are fueling a third-party logistics boom in the continent, but the market is “very fragmented with lots of local players in domestic markets,” said a DHL executive.

Unlike in the U.S. and Europe, the sourcing of many auto parts in Asia are still managed directly by the original equipment manufacturing using local providers, said Bill Olver, Asia Pacific vice president for DHL’s supply chain logistics and automotive division

“There are lots of new plants and operations setting up in new locations which means new requirements and new geographies, but we’re looking to use solutions that are repeatable, that already work elsewhere,” he said.

Olver said DHL is working with China and Indian manufacturers to build supply chains for production in Latin America and Africa. With auto-related shipments making up roughly a tenth of all container movements, Olver said the auto industry is the second largest driver of shipping in Asia after raw materials.

Vehicle sales this year in Asia will reach around 32 million units out of some 80 million globally. Next year sales are forecast to reach 35 million, driving further demand for 3PL services.

“We are mainly providing inbound parts and after sale services, and niche services for finished cars,” he said.

The push of production to inland China is extending supply chains, particularly when parts suppliers to overseas markets have moved away from the coast.

“You have longer supply chains, which could diminish the effect of sourcing in China-Asia, so you have to be incredibly lean,” Olver said. You don’t want unnecessary inventory, so it has to be synchronized with the plant which might be in the U.S.”

-- Contact Mike King at michael@borderline.eu.com