How can automotive industry reduce logistics costs and reach maximum supply chain resilience in 2022?

Automotive industry logistics challenges

The challenges for the logistics departments of companies from the automotive industry will be very serious in 2022. Several are the main factors which will strongly influence the work of these departments. In the first place, of course, are supply disruptions due to border and seaport lockdowns caused by anti-pandemic measures related to COVID-19. Add warehouse quarantine requirements, and travel restrictions. And this is just the beginning. The constantly rising fuel prices, the jump in the prices of the logistics inventory, as well as the inflation – make the logistics process incredibly expensive. The conflict between Russia and NATO and the impending new Cold War will certainly lead to the loss of markets, even higher prices for natural gas and oil, and more and more costs. Thus, GOAL №1 for the logistics departments of automotive companies remains: REDUCTION OF COSTS.

1. Reduction of costs

 A) Reusable packaging in the automotive industry

Reusable (or returnable) packaging means the repeated use of super strong and durable pallet boxes for transporting products and parts. In most cases, these are plastic pallet boxes made of high-density polyethylene (HDPE). These containers can be used for 3 to 20 years or between 100 and 500 loops. This means reducing the cost of buying new disposable pallet boxes from cardboard or wood. As well as reducing the cost of disposing of these one-use packagings.

Plastic pallet boxes (PPB) have a larger capacity. They are stronger, safer, easier to maintain and made for long life. The durable and strong material from which PPB are made ensures the safety of transported parts. They are also ideally suited for automatic assembly lines.

Returnable packaging products have long been used in the automotive industry. As early as 1930, Ford began using innovatively sized reusable boxes for shipping parts. In the 80s and 90s of the last century, the use of plastic containers and reusable pallet boxes was already the preferred logistics method.

Reusable products in automotive industry

Today’s automotive industry logistics departments use a wide range of reusable products such as KLT containers (Plastic KLT stacking boxes), euro containers and plastic pallets. Custom packaging is also often used, which includes plastic and wooden containers for special purposes.

Foldable pallet boxes are most preferred for transporting parts and products over long distances. This logistics product saves companies money at every stage of the supply chain, optimizing the space used, both in warehouses and in transportation. However, they are most valued in back transportation. Due to the significantly less space they occupy in the vehicle, this provides them with a very high Return Rate. This is the ratio of the number of foldable containers that can be shipped in the space of one upright container. Higher ratio = lower transportation costs for the company.

Gitterboxes are a good solution for high storage warehouses. These are reusable metal crates with standard size. Especially valued by automotive companies because they are suitable for packaging and transportation of heavy materials and parts (including non-standard components).

B) Pooling and Inventory Management

Maximum optimization of storage space by using foldable pallet boxes and foldable racks.

2. Ensuring the resilience of the supply chain

Resilience means trouble-free delivery and maximum good utilization of available logistics resources. Thanks to the reusable packaging strategy, many automotive companies work with a supply chain in a closed loop. This provides them with the necessary sustainability and consistency in development. Reusable containers are durable. PPB are safe for parts and products, as well as for teams in warehouses. They are easy to handle when loading and unloading parts and products. Well-matched for automatic assembly lines. Easy to clean. Plastic pallet boxes can be repaired if damaged, then reused. This, as well as reduced CO2 emissions in the back transport of empty folded containers makes them eco-friendly.

Therefore, according to over 80% of respondents expect demand for reusable packaging to increase even more due to the ongoing global pandemic, fuel price problems and inflation, which also affected the automotive industry.  The Compound Annual Growth Rate (CAGR) of the Reusable plastic returnable transport packaging market in the EU and the US is expected to grow steadily by around 3.4% over the period 2021-2026.

Zamko is an independent foldable pallet boxes specialist. Our experts are ready to respond to any inquiries about reusable packaging and opportunities for your company to switch to this highly profitable strategy.