The economic downturn has severely affected the international automotive industry and has generated, among others, two phenomena: on the one hand, manufacturers externalize their production, searching both cheaper work force and getting closer to emerging automotive markets such as Eastern Europe, Russia, the CIS and Asia. On the other hand, they over-increase production on domestic markets while trying to meet the demands of the authorities who put pressure on manufacturers to maintain jobs in residence countries since the states had allocated major subsidies to the domestic automotive industry and don’t want these funds to be estranged. Both phenomena have positively influenced the railway and intermodal transport of cars. The major logistics companies have announced business expansion due to the production shift from Western to Eastern Europe.
The economic crisis has changed the automotive industry and imposed new criteria for suppliers, the cost being the top priority of all automotive manufacturers. Most of them have been confronted with serious problems and have been on the verge of shutting down business. The salvation came from national authorities who granted subsidies and state aids in the hope of avoiding millions of people being dismissed. However, the initiative has only offered time to manufacturers who didn’t return to more optimistic figures and who are still looking for solutions to reduce costs and overcome the current economic deadlock. Externalising production was one of the solutions but it attracted the indignation of domestic markets since it was considered unfair to use funds coming from state aids to invest abroad and sacrifice the domestic work force for low-cost foreign personnel. The countries which tend to overprotect their own industry, such as France or Italy, have been the ones which accused these trends most, repeatedly asking large auto manufacturers, such as Renault or Fiat not to shut down the gates of the factories in France and Italy respectively and the presence of government representatives in their boards. The manufacturers’ answer to the authorities’ pressure was increasing production on domestic markets despite the drop of car demand. This way, they hoped to answer the government’s demands and continue to receive financial support which could enable the construction of facilities in those countries where the car demand was still on the increase (China, India, Turkey).
These two phenomena have affected the European intermodal car transport in two ways: the factories built abroad (mostly in Eastern Europe and the CIS) deliver to region states and emerging countries generating car intermodal transport services in countries where this type of transport has not existed before and where the quasi-monopole position of the few operators on an emerging market ensures a constant development on a limited period of time generating a real boom. Meanwhile, the facilities in residence countries export highly performing components which cannot be manufactured in foreign factories. This is most of the time the surplus resulted from increasing production which boosts the transport of car components in the West-East direction.
Carriers also expand to East
At the end of June 2010, GEFCO Group, part of the Peugeot-Citroen Group, launched a new Trans-European service for car component transport while creating the Smart Supply Systems (SSS) Consortium with a Russian partner, Russian Transport Line Group (RTL). Gefco’s business in Russia increased by 30% in the first five months of 2010 compared to 2009, to EUR 22 Million. Yves Fargues, Gefco’s CEO said that “Currently, Russia is one of the most important car markets”. Gefco is also member of another car component transport consortium in the CIS, ALGA, together with Axis Transport Company (ATC). STVA Group, one of the important multimodal car transport companies has recently expanded to the Polish and Romanian markets and developed consortiums on the respective markets. In Poland, STVA has set up MOSTVA together with the Germans from Mosolf and has redirected towards the car manufacturers on the Polish market, especially Fiat, as long as Poland has exceeded many western countries in car production. In Romania, STVA has signed an agreement through its Turkish subsidiary VEVA with local companies Ansett Logistics and CFR Marfa for the transport of Dacia cars between France and Turkey. The company has recently launched a new double-deck wagon concept for car transport called WINCAR which provides easy charging and high safety in traffic.
by Alin Lupulescu
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