Disruptions have put a puncture in the global automotive industry over the past four years but greater collaboration between original equipment manufacturers (OEMs) and supply chain leaders can help recovery and growth.  

Read also: REVEALED: How Do Disruptions in the Supply Chain Affect the Automotive Industry

Bearing the brunt of unpredictability

There was a time when we could frame just one of the many immense challenges of the past four years as a ‘black swan event’. The truth is the world has entered a new era of globalization. And it is an era that is redefining supply chains and global trade.  

Conflict will cost Ukraine $120 billion in economic output and war continues to impact shipping in the Red Sea. Climate events cost $1 billion every three weeks. And even isolated incidents such as the Francis Scott Key Bridge collapse in Baltimore have shaken global supply chains. 

One of the largest industries in the world by revenue, the automotive industry has been at the forefront of facing down the supply chain challenges of the past four years. Estimations suggest approximately 12% of global automotive output vanished from 2020 to 2022 due to the COVID-19 pandemic – but the challenges have not stopped there. 

Inflationary pressures are impacting costs. Labor turnover in Europe and North America, and fluctuating volume requirements, are lowering efficiency. Conflict and a fraught geopolitical environment are leading to parts shortages. And efficient supply chains for semiconductors are under severe pressure – indeed, in 2023 alone, it was estimated that there was a production shortfall of approximately 2.8 million vehicles due to semiconductor market pressures. 

On the road to recovery

Despite the challenges, the automotive industry is stabilizing. According to Moody’s, in 2023 global car sales expanded at a robust rate of +10.8% year-on-year and the long-term outlook suggests the global automotive industry will grow to more than $6 billion by 2031. 

But to achieve that growth, OEMs will need resilient and agile global supply chains.

A commitment to cars 

DP World works in partnership with eight of the top 10 global automakers to make this supply chain a reality.  

Fundamental to our work are our 19 ‘Roll-on, Roll-off’ (Ro-Ro) terminals spread across Asia, Middle East, Europe, Africa and the Americas that handle close to 2.5 million automotive units annually and offer a wide array of value-added services to ensure vehicles are dealer-ready.​ 

An example is our ‘cars in container’ solution that can fit up to five cars in a single container for OEMs – resulting in higher space utilization and lower carbon emissions per unit.​ 

In Europe, we are also working with major OEMs to​ co-design new intermodal transport solutions. We recently opened a new intermodal terminal in Aiud, and added a new Ro-Ro terminal in Constanta, which sits on the Black Sea. 

In the USA, we are working with OEMs as they open new production infrastructure closer to key markets as part of their ‘nearshoring efforts’, providing new routes to speed up transit and remove wasteful dwell time. We also manage in-plant logistics at the world’s largest single car manufacturing complex, requiring innovative solutions to accurately organize and pick over 32 million parts per year.​

All of these solutions have been developed in partnership with customers, and designed to meet their demand for creative, tailored solutions that not only circumvent current disruptions, but also create resilient and future-ready supply chains. 

Automotive is an industry that contributes approximately 3% of total world output of GDP, employs millions of people and is at the forefront of new and emerging technologies. OEMs have an opportunity to work with supply chain leaders to access the speed, transparency and efficiency they need in an era of unpredictability, and it’s a collaboration that is set to create lasting success in the face of cyclical disruptions.