In the $2.5 trillion global automotive manufacturing industry, every second counts. As the world saw during the supply chain crisis that accompanied the COVID-19 pandemic, disruptions can have a major impact on automotive supply chains.
- Disruptions to the raw materials supply chains, as well as Chinese manufacturing facilities, left automotive manufacturers without the ability to manufacture critical components of vehicles, including body panels and internal components.
- As disruptions grew, the semiconductor industry, rooted largely in Asian countries highly impacted by the COVID-19 pandemic, was greatly affected. This left manufacturers without critical chips for their vehicles, leading to production backlogs at a critical choke point in the automotive supply chain.
- Beyond material delays, 78% of automotive manufacturers reported not having enough staff to run production lines, according to analysis from KPMG, leading to critical backlogs and production delays.
The COVID-19 pandemic demonstrated to automotive manufacturers the critical importance of resilience in the face of disruptions. While the effects of the COVID-19 pandemic have waned, today’s automotive manufacturers face an onslaught of disruptions across the global supply chain.
The ongoing drought in the Panama Canal has led canal authorities to further limit vessel transits. With a significant amount of automotive manufacturing cargo transiting the canal between Asia and the U.S., as well as Europe, the impact on the automotive manufacturing industry cannot be overstated. “The canal conducts 45 million tons a year of what the shipping industry calls "roll-on-roll-off" cargo, meaning vehicles,” Automotive News reports, “And besides that, there are materials, auto parts and petroleum products, according to the Panama Canal Authority.”
The attacks upon shipping vessels in the Red Sea, committed by Houthi Rebels as a means of supporting Hamas in the ongoing Israel–Hamas war, have had a similarly profound impact on the automotive supply chain. According to S&P Global, major manufacturers like Tesla and Volvo have been forced to halt production operations in Europe, while Suzuki and Stellantis have seen significant disruptions to production lines globally, and have turned to air freight, a significantly more expensive transportation option than maritime, as a means of mitigating the disruptions.
Although the COVID-19 pandemic may no longer be a threat to today’s automotive supply chains, automotive manufacturers nonetheless face a staggering array of disruptions from across the global supply chain. In this article, we’re looking at some of the key challenges facing automotive manufacturers as they attempt to leverage freight visibility for resilience, and how smart manufacturers from across the global automotive landscape are leveraging ocean container tracking for unparalleled efficiency in manufacturing supply chains.
Key Challenges in Container Visibility for Automotive Manufacturers
The core strength of the automotive manufacturing industry, its vast network of global sources and suppliers, is also its greatest vulnerability. With approximately 30,000 individual parts comprising a vehicle, manufacturers are forced to contend with vast, complex supply chains, often spanning the entire globe. In this section, we’ll look at some of the key challenges presented by the vast automotive supply chain.
Complex Supply Chain Networks
Let’s imagine an SUV: while the final finished product might be delivered to a customer in a suburban lot, its manufacturing is dependent on a vast, interconnected network of suppliers. Perhaps the raw materials for the vehicle’s body began in Africa, while the chips were manufactured in Taiwan, and the final assembly completed in Tennessee.
While this example may be grossly oversimplified, it demonstrates the global complexity of the automotive manufacturing supply chain. Say there’s an issue in shipping the materials from Africa, or a shortage of chips in Taiwan, or a strike at the final assembly plant in Tennessee–suddenly, the SUV disappears from the lot in suburbia, and the customer is left without a vehicle.
A single break in the automotive manufacturing supply chain represents more than a momentary hurdle; instead, a supply chain breakage at any point in the automotive supply chain can lead to disastrous down-chain consequences, leading to critical production backlogs and, ultimately, lost revenue. As we saw during the COVID-19 pandemic, automotive manufacturing processes are especially prone to the impact of disruptions. According to reporting from CNBC, 51.7% of automotive supply chain managers described the impact of the COVID-19 pandemic on their operations as “very significant.”
Global Operations and Cross-Border Logistics
As automotive supply chains shift to reflect the dynamic nature of the global geopolitical landscape, manufacturers are forced to contend with disruption stemming from conflict and international squabbles. Nowhere has this been more true than in the Red Sea, where ongoing attacks on vessels by Houthi Rebels have forced many shippers to take drastic steps to reroute shipments, adding as much as 14 days to transit times.
But for the automotive supply chain, the cost of global logistics goes beyond conflicts. With the rise in cross-border shipping, especially as automotive manufacturers nearshored manufacturing operations to Mexico, manufacturers are forced to contend with an increasingly complex customs landscape. Without adequate visibility over transportation operations, border delays can quickly result in significant production backlogs.
Stringent Timelines and Just-in-Time Manufacturing
Faced with pressure from consumers to lower manufacturing costs, the automotive manufacturing supply chain operates largely on a “just-in-time” model, leaving little room for errors and disruptions. While this model, in which little overstock is stored in case of disruptions, has led to greater profitability for automotive manufacturers, it leaves supply chains vulnerable to catastrophic delays. In order to balance the cost-effectiveness of ‘just-in-time’ with the need for greater resilience in a global supply chain plagued by disruption, automotive manufacturers are striving to build real-time visibility over critical transportation operations.
Ocean Container Tracking: Balancing Resilience and Efficiency in Automotive Supply Chains
As automotive manufacturers work to build efficient supply chains in an era of disruption, supply chain resilience is increasingly vital. With OpenTrack, automotive manufacturers can leverage innovative ocean container tracking solutions to build the efficient, resilient supply chains demanded by a highly dynamic global logistics landscape.
Advanced Tracking Technologies
In the quest for enhanced visibility, manufacturers are turning to advanced tracking technologies, such as OpenTrack's real-time container tracking. These technologies offer granular insights into the location and condition of containers throughout the supply chain. Real-time tracking enables manufacturers to monitor shipments at each stage, providing crucial data to make informed decisions.
These tracking technologies also come equipped with alert systems, addressing issues like rolled cargo, demurrage, detention, and the last free day (LFD). Alerts play a pivotal role in proactive decision-making, allowing manufacturers to swiftly respond to disruptions and prevent potential setbacks.
Collaborative Platforms and Information Sharing
Manufacturers are benefiting from collaborative platforms that facilitate real-time data sharing among stakeholders. These platforms allow different entities in the supply chain to share information seamlessly, fostering better coordination and responsiveness. The shared data includes real-time updates on shipments, potential delays, and any other relevant information, enabling stakeholders to work together to address challenges.
Cloud-Based Integrated Systems
Cloud-based integrated systems play a crucial role in breaking down data silos that often hinder efficient communication in supply chains. These systems connect different stages of the supply chain, from raw material suppliers to end-product distributors. By providing a unified platform for data exchange, integrated systems enhance visibility and enable stakeholders to access relevant information promptly. This interconnected approach contributes to more agile and responsive supply chain management.
Ocean Container Tracking from OpenTrack: The Key to Balancing Resilience and Efficiency in Automotive Supply Chains
In an era of supply chain disruptions, OpenTrack provides automotive manufacturers with the data-driven supply chain visibility needed to build resilient and efficient supply chains. With industry-leading ocean container tracking software, OpenTrack offers automotive manufacturers an unparalleled suite of ocean container tracking assets:
- Real-Time Visibility ensures that automotive manufacturers maintain visibility over highly dynamic supply chains.
- Automated Alerts provide automotive manufacturers with peerless awareness over ocean freight operations.
- API Integration allows automotive manufacturers to leverage ocean container tracking within their existing tech stack.
Book a demo with OpenTrack today, and learn how ocean container tracking can help you balance resilience and efficiency in your automotive manufacturing supply chain today.
