Logistics for automotive sector faces boom

automotive

With world trade seemingly becalmed, the temptation is to think that the growth prospects for logistics are low. Yet, looking at the automotive logistics sector little could be further from the truth.

Figures given in a presentation at the Automotive Logistics Conference in Bonn a few weeks ago by Christoph Stuermer of PwC AutoFacts strongly implied that the sector was facing a boom. Overall, PwC foresee that worldwide the number of cars sold will grow by 25% over the next six years. This growth is expected to be driven by some very untraditional markets with India and South East Asia forecast to grow by 65%. However, developed markets still have substantial energy with North America, for example, estimated to expand by 13.6% over the period.

Even in Europe – where the Eurozone economy is believed to be in a structural slump- car sales in Italy, Spain and Portugal have seen growth at 20-25%, although it is hard not think that much of this is bounce-back from the severe recession over past seven or eight years. The non-Eurozone economies in Britain and Scandinavia continue to see sustained buoyancy. Again, against expectations PwC think that the background economic conditions strongly point to a healthy market, with wider consumption growth, zero interest rates and a low fuel price. Yet despite an increasing number of cars sold the existing fleet is still aged. To drive-down the average age of cars on the road sales would have to increase even more.

In addition, the pattern of trade in cars also continues change with exports from South Korea and Japan increasingly heading for emerging markets rather than the North America as US markets are served by local production.

China will remain a huge market despite economy issues, but with few exports or imports proportionate to the size of it market. That said, the absolute numbers are still high and it hard not to see it having a big impact.

Therefore, the outlook for all types of automotive logistics services looks remarkably good. As ever, deep sea car-carriers look to be well placed with continuing complexity in global finished vehicle movements. However, production across the world will generally expand rapidly benefiting all parts of the sector in almost all geographies.

Source: Transport Intelligence, 13th April 2016

Author: Thomas Cullen