Automotive Logistics in China

Wang ShuqinInstitute of Systems Engineering Southeast University Nanjing, P. R. China

Outline

Economic and logistics development Automotive logistics Logistics of Volkswagen Industry prospects

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Economic Reform

The Chinese economic reform refers to the program of economic reforms called "Socialism with Chinese characteristics" .

1970s -1980s, opening trade with the outside world, instituting the household responsibility system in agriculture.

1980s -1990s, focused on creating a pricing system and decreasing the role of the state in resource allocations.

1990s focused on closing unprofitable enterprises and dealing with insolvency in the banking system.

After the start of the 21st century, increased focus has been placed on narrowing the gap between rich and poor in China.

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WTO Entry

The World Trade Organization (WTO) On December 11, 2001 China formally became

the 143rd member of the WTO. What really behind these changes is the

transformation from planned economy to market economy.

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Signing ceremony

GDP and foreign trade both have dramatic growth

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2008 Data

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GDP 30 trillion yuan

Import and export trade 2.56 trillion U.S. dollars

Total social logistics 89.9 trillion yuan

Total rail freight 3.3 billion tons

Total rail freight turnover 2.5 trillion tons/km

Total River freight 2.86 billion tons

Total river fright turnover 4.1 trillion tons/km

Port throughput 4.28 billion tons

Container throughput 128 million standard containers

What is Automotive Logistics ?

Integrated management

Bridge

Transportation Suppliers of raw materials

Warehousing

Packaging

Handling

Modification

Information

Spare parts providers

Vehicle manufacturers

Wholesalers

Logistics companies

End users7

The Characteristics of Automotive Logistics

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Automotive Logistics

With sustained economic development and increasing living standard, automobile consumption grows rapidly.

In the next 10 years, auto demand will remain 10% to 15% increase.

China has becoming the supply base of world's automobile production, so its auto logistics market cannot be ignored.

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Source: China Association of Automobile Manufactures, CAAM

1999-2008 Automobile production scale and growth rate

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Source: China Association of Automobile Manufactures, CAAM

2000-2008 Automobile sales volume and growth rate

The Important Role Port Plays in Automotive Logistics

Port is important hub in automotive logistics chain.

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Dalian automobile portGuangzhou automobile port

Shanghai port

Parts suppliers Country B

Local parts suppliers

Parts supplier #1

Parts supplier #2

Multi-country cross-docking

warehouse

JIT/VMI Warehouse

Cross-docking Warehouse

Parts suppliers Country C

Parts suppliers Country A

Vehicle assembly

plants

Overseas assembling

CKD/SKD

Port Dealers

Parts Suppliers

Parts logistics Postpartum logistics13

Port

Business Process of Port Automotive

Logistics

Shipping Capacity

COSCO China Shipping Company

COSCO-MOL CSC

6000 parking spaces

6580 parking spaces

600-700 parking spaces

3000 parking spaces

4 Auto Ships 4 Auto Ships 3 Auto Ship 9 Auto Ships

Top Ten Car Shipping Transportation Companies

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Name Company Number of Ships

Total capacity DWT Vessel age

1 MOL 55 888141 16148 11

2 NYK 54 904995 16759 15

3 K-LINE 50 733380 14667 14

4 Cido 38 564181 14846 12

5 Wallenius Wilhelmsen

30 642992 21433 17

6 Leif Hoegh 28 484608 17307 15

7 Eukor Car Carrier 23 366697 15943 11

8 Crimakli 22 400636 18210 5

9 Yoyofuji Shipping 16 198165 12385 11

10 UECC 14 55139 3938 14

Source: Clarkson Research 2007.9

Worldwide Automotive Logistics Transit Ports: New York Port and New Jersey Port, USA Bremerhaven, Germany Zeebrugge port, Belgium Tahara car terminal, Japan Halifax Harbour, Canada

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The Main Problems

The supply chain of automotive logistics is very long.

Automobile logistics business model should be improved.

Entry barrier is low, and out frequently. Slow progress in the standardization of automotive

logistics. Automotive Logistics revenue mainly from basic

services. The application of advanced information technology

is not popular.17

In the international market, 80% of the automotive enterprises outsourcing;In china, the vast majority of logistics providers are the subsidiary companies of manufacturer.

National Standards, GB1589-2004Length, 16.5m, Width, 2.5m, Height 4.2mBut in factLength, 22m, Width, 2.7m, Height 4.4m

German Cars There many world famous auto brands. German cars take up a great market share in China.

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Audi Volkswagen Mercedes-Benz

BMW Porsche

Volkswagen

Volkswagen

In Germany, 29% of logistics companies involved in automotive logistics.

Four-layer supply chain of Volkswagen:(Schenker)

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Kassel

Spare parts importers

Retailers

Parts distribution center in Singapore

Shanghai Volkswagen In China, Volkswagen has two joint venture.

Founded in 1985, Shanghai Volkswagen, a Sino-German joint venture, the investment ratio of 50% each. It is one of the largest production bases in China.

For automobile enterprises, automotive logistics includes production planning, purchase order devolution and tracking, BOM maintenance, etc.

20POLO LAVIDA TIGUANPASSAT Touran

SANTANA

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Logistics strategy

outsourcing Risk sharing

Data Base

Reduce costs

Development needs

Focus on core business

Increaseefficiency

Improve customer satisfaction

Saving investment

After outsourcing:

Warehouse logistics Transport logistics MIS(TMS and WMS)

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Industry Prospects

There is still a great room for development of automotive logistics in China.

International automotive logistics all want to share the Chinese market.

3PL will be the dominant mode of automotive logistics.

More value-added services, and the optimization of automotive logistics supply chain is important.

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Thank you!

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