Green logistics help reduce auto industry carbon footprint

Global mail and logistics major Deutsche Post DHL is focusing on three major links in the supply chain in order to help the auto industry reduce its overall carbon footprint – inbound to manufacturing services, in-plant and production logistics and the aftermarket.

Automotive Industries (AI) asked Fathi Tlatli President Global Sector Automotive DHL Customers Solutions & Innovation, how DHL is helping the industry to go green.

Tlatli: There are more and more small cars that use less CO2 with all kinds of new technologies being put in place. Every launch requires thousands of components that need to be delivered, as well as prototypes and marketing material. In this environment where the logistics spend can range from €1 million to €20 million there are numerous opportunities for specialists. DHL has implemented several initiatives within the scope of its GoGreen climate protection program. These include pilot projects on hybrid or electric vehicles, network optimization, fleet modernization and efficient driving campaigns. DHL also provides solutions for more CO2 efficient supply chains for its customers, including emission optimization strategies and CO2 neutral shipping options.

AI: What about the electric and hybrid sectors?

Tlatli: Electric and hybrid vehicles are an exciting new business. We started two years ago with Renault, and we quickly realized how much there is to learn. Regulation around battery shipment is complex and changing.

AI: What do you see for emerging markets?

Tlatli: We are looking to enhance our presence in markets like Brazil, Mexico, China, Thailand, South Africa, Russia and Turkey – and to develop more local partnerships there. We are working more with new champions from the emerging markets, manufacturers like Tata and Geely.

AI: What is the potential electric and hybrid vehicles in these markets?

Tlatli: The Chinese government plans to have 500,000 electric cars, trucks and buses on the country’s roads by 2015 and five million by 2020 when electric cars could account for 7% of new cars sales there.

AI: What do you believe makes DHL’s automotive solutions stand out?

Tlatli: We leverage solutions across customers geographically and across customers with similar requirements to create economies of scope and scale. DHL’s worldwide presence and ability to leverage existing solutions and best practices from other regions or customers is a key strength and differentiator. Up to now our Inbound to Manufacturing and Lead Logistic Provider solutions have tended to be tailor-made for each new customer, but the automotive team has identified ways to leverage them across customers. A segmented approach (passenger vehicles, commercial vehicles, component manufacturers, tires) allows DHL to more readily leverage best practices for similar needs in different areas of the supply chain, such as a strong inbound to manufacturing solution in central Europe for a leading manufacturer that can be adapted for other areas or companies.

AI: How do you see Russia and China emerging as automotive hubs?

Tlatli: The market in China is outgrowing supply. As volumes get bigger that affects the reliability of the service provider and the quality of the service you get. The challenge is availability of vehicles, of skilled people, of visibility in systems. But the people there are very impressive, providing high quality service. China is a huge market and many people live in enormous cities in the middle of the country, so a lot of vehicle buyers are in the west. The shift westwards affects producers too. The government offers incentives to produce there, though the infrastructure is not as good as along the coast. The workforce there is less expensive than in Shanghai, management costs are close to those in Western Europe. We are also supporting OEMs in Russia and the former Eastern Europe. DHL is developing rail routes to bring vehicles to Europe via Russia. Combining road and rail optimizes fuel costs. Russia is a big country with huge opportunities and if the financial forecasts are correct, the country has a good economic future. It’s become a buzzing automotive center.

AI: How have manufacturers from emerging markets such as Geely and Tata Motors changed the face of the automotive manufacturing scenario?

Tlatli: Many Asian companies have acquired leading global producers and turned into international players almost overnight. China’s Geely recently acquired Volvo cars, and Indian Tata bought Jaguar Land Rover. Both are now important customers for DHL. We have further enhanced our support teams for these valued customers, not only where their headquarters are but also where they have key operations in the world.