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Issue no. 39 - 17 October 2011
Automotive
Baldissara’s rethoric question finds no answers at the Eurodisney conference in Paris
ECG’s president asks: “Cost vs. Strategy: is vehicle distribution a commodity or a marketing advantage?” but the carmakers industry cannot find any solution to the dilemma
“Cost vs. Strategy: is vehicle distribution a commodity or a marketing advantage?” was the appealing title of the ECG conference held in Paris - apparently the most attended ever, with some 270 delegates, in the history of an organization that was founded in 1997 - and made possible to the strong support received by sponsors Gefco, Lohr, Aral, Ball System, CargoTel, CAT, Inform, TES, Vehnet and DVZ.
The hot theme suggested by President Costantino Baldissara seems however not to have been matched since in  the end the LSPs and the OEMs appear to be still divided in their respective positions.
“Since the beginning of the economic dowturn, we have tried to look ahead, trusting in a steady, speedy recovery. Today, after a terrible summer, uncertainty prevails once again” the Italian manager (into Grimaldi Group of Naples) sadly noted appealing the national and international governments to foster incentive measures which are vital to support such a fundamental sector as the car industry, as showed by some specific figures: the automotive direct employment is 3.5 Million jobs, i.e. 10.2% of total employment in EU manufacturing, and rises up to 12.6 Million jobs including indirect employment,  being equal to 5.6% of EU employed population. “This is an industry that creates five indirect jobs for every direct job it creates. Today, more than ever, allocating funds to sustaining our industry would be the most efficient way of restoring Europe’s economic health. Scrapping bonuses and other such investments, if targeted at the replacement of old cars and other ‘dirty’ means of transport, would also complement the drive towards environmental sustainability”.
In fact according to some 2009 figures from ANFAC and ACEA, as much as 34.6% of the European fleet was more than ten years old. This means that about 77 million vehicles are today suitable for scrapping and replacement by cleaner more efficient vehicles. “We need to transform this necessity into a virtue. Unfortunately the Finished Vehicle Logistics sector does not get the recognition it deserves; there is a widespread misperception that moving a car is a simple operation that needs no particular investment and generates no special costs. The danger of such prejudice is obvious: in these hard times, once again logistics becomes simply a cost to cut and the importance of LSP investment in helping the automotive industry meet consumer demand is forgotten”  the ECG President warns, giving some more data about the magnitude of the sector he represents: “Our sector controls combined assets worth €40 billion, being equivalent to the sale of 2.6 million cars or to the construction of 60 new car plants. Its members altogether provide and operate efficiently 373 car carrier ships, 13,000 railway wagons, 22 river barges and almost 18,000 road transporters. This is the fleet that ECG’s members put at the disposal of the carmakers every day. Unfortunately, this huge investment does not get the respect it deserves and the high risks taken by many entrepreneurs are not fully appreciated”.
Baldissara admits that the title of the conference is slightly provocative, being indeed a rhetorical question, bringing an example: “How would you describe a logistics provider who invests million of euros in assets that need decades to be written off, without any certainty about volumes and rates in the future? Is this a commodity? Or is this a marketing advantage? We view the expected results of the OEMs and inbound suppliers with great admiration. Unfortunately, the cost pressures weighing on outbound logistics operators are very real. Also, most of our members say they expect shortages in the availability of experienced truck drivers as well as reporting an increasing lack of confidence in future volumes, in the possibility of getting long-term contracts, securing viable rates
and in generating a positive return on their investment”.
According to ECG the paradox is that, despite car transport capacity is more or less in line with OEM needs, yet logistics operators are required to invest in new assets in order to replace old means of transport and make the fleet more efficient and environmentally sustainable.
“Once again, I would urge carmakers and logistics providers to behave responsibly so to work together to get through this difficult period. Many operators are still suffering the effects of the last economic crisis and would have difficulty withstanding a second dowturn. That is why this is the right moment to join forces and work together in strength and unity rather than facing the future alone and vulnerable”.
A nightmare scenario is finally depicted. “Think how painful it could be a healthy industry unable to sell its products for a deficit in its delivery capacity, just because FVL providers do not exist anymore…” is the menace made by Baldissara in conclusion.
A concerned message comes also from Juan Riva, president of the European Community Shipowners’ Assocation ECSA and of Suardiaz, for the too much imposing new legislation due to come into force in theme of noxious emissions caused by vessels. “The European short sea shipping might lose 40% of its current traffic for the troubles of matching such a restrictive rule by 2015, paradoxically in favour of the road tran sport” he warns. “We confide the European Commission can at least partly revise its firm position on this issue and therefore are lobbying at Bruxelles to this aim”.
From the manufacturers’ side, Egon Christ (Daimler), had to give a bad news, following what agreed in ECG’s last official public meeting in Warsaw of past May: “The hoped Code of Conduct between ACEA and ECG is not viable since we learnt its might incur into the  attention of the European Antitrust, dubbing its as a potential cartel. Let’s therefore gather again at the common working meeting to be held on 14 December 2011” ended the German manager.
By their side the members of ECG will take part to the next General Assembly scheduled in May 2012 aboard a cruise-ferry of DFDS deployed in its ordinary route from Oslo (Norway) to Copenhagen (Denmark), that one thus resulting the first ever floating conference between two countries in this sector.

Angelo Scorza
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Read the whole magazine:
Year XI, n. 15
Genoa, 14/4/2014
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