The Panalpina Group is one of the world's leading
providers of supply chain solutions, combining
intercontinental air and ocean freight with comprehensive
value-added logistics and supply chain services. The
company operates a global network with some 500 branches
in more than 80 countries and employs approximately
15,500
people worldwide.
In the United States, Panalpina employs around 2,000
staff in 40 offices across the country covering all the major
locations where it has significant business and clients. I
spoke with Lucas Kuehner, appointed last month as the
company’s global head of air freight, who was managing
director USA at the time of our conversation.
Automotive is one of several key verticals for Panalpina,
he explained. Others include healthcare and oil and
gas. “We have worked with OEMs and
suppliers to the automotive industry for
over three decades, so automotive is
really part of our DNA. In
the US, it accounts
for
between 15%
and 20% of our
business.”
Kuehner sees the proliferation of
auto manufacturing in the southeastern states of the
US as a particular challenge for the supply chain.
Traditionally, it was northern states such as Michigan and
Ohio which housed the bulk of the assembly plants but
companies such as Honda, Volkswagen, Hyundai, Kia,
Nissan, Toyota, Daimler and BMW among others are now
taking advantage of favourable wage rates, a deep labour
pool, right-to-work laws and access to transportation assets
which have brought investment from automakers foreign
and domestic, as well as a clutch of tier 1 and tier 2
suppliers. The sheer size of these plants presents its own
challenges. “Suppliers are having to set up different
networks as the southeast of the country becomes a much
more significant manufacturing base, and this is a
continuous process,” said Kuehner.
Speed to markets and shortening the supply chain is
another challenge, as is dealing with emergency situations
and building resilient supply chains,” he added. “With all
the planning that goes into building a car and the
complexity that comes with it there is always something
that gets forgotten and that is when emergency situations
arise and we need to switch from ocean freight to air freight
to prevent costly factory stoppages.”
A series of natural disasters in various parts of the
world over the past couple of years has caused purchasing
and logistics people to look much more closely at their
supply chains. “I think the Icelandic volcano was a defining
moment, especially for the European OEMs which supply a
lot of their factories in the southeast of the US from
Europe,” said Kuehner. “Seeing how quickly a supply chain
can be disrupted by a natural disaster that no-one could
predict has brought the topic to the forefront of discussions
we are now having with OEMs about how we can ensure
delivery in full to their plants. This is what I meant when I
mentioned the resilience which needs to be built into their
supply chains.”
It is first and foremost Panalpina’s
wealth of experience in the
automotive industry which,
Kuehner believes, differentiates
the company from its
competitors. “We have
grown up with many of
our clients and are
part of their
supply
chains. We
talk to OEMs
and first and
second tier suppliers,
understand their business
model and are geared to
support them. Our transportation
uplift is synchronised with the load fill
service so that we can provide consolidation
services which are not standard to any industry
but are really geared to automotive.
From a competitive advantage perspective, we
operate our own, controlled air freight network, specifically
on the trans-Atlantic route between Luxembourg and
Huntsville, Alabama, a route which goes strategically into
that southeast area. We also use commercial capacity to
ensure that, in different situations, be it a surge of demand
or where a large shipment needs to be kept intact or in an
emergency situation the plant can remain up and running.
During the volcano crisis, we helped a luxury brand car
manufacturer in the southeast of the US to keep its
operation functioning throughout. Every other plant was
shut down for several days.
We have extended our automotive thinking to the
southern border with Mexico where we work with second
tier suppliers to the automotive world combining
transportation and logistics, doing light assembly, storage
and distribution from El Paso and McAllen into US plants. I
don’t like the concept of a one-stop shop, but the fact is
that we can offer both intercontinental transportation and
services to customers who want to switch to a near-sourcing
strategy.”
Mexico is a region which Kuehner believes will continue
to offer significant opportunities to the automotive industry.
Mexico has huge challenges with the rate of criminality and
the drugs issue, but we need to see beyond that,” he said.
It is a country with immense resource potential and,
despite the security challenges, we see significant assembly
and manufacturing in the automotive and electronic
markets. Mexico in itself is a huge domestic market. We
used to talk about China, Russia, Brazil and India as
emerging markets and I believe Mexico should be included
in this group. The opportunity is there based on the size
and growth of the population and the geographical location
of the country.”
In 2009, Kuehner was quoted as saying “the freight
forwarder is the new economist.” This was the period of
global economic crisis when the automotive industry, in
common with many others, was suffering from the worst
slump in many years. For some people, consulting a freight
forwarder such as Panalpina was as good a way as any of
determining the state of the economy, hence Kuehner’s
comment.
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