Automotive logistics: Meaning, Role, Challenges, Innovations and more

When we talk of the automotive industry, efficient logistics operations can be the most challenging. And there must be efficacy and consistency in all the automotive logistics processes to achieve success in this sector. Further, automotive logistics is broken down into several types such as production, manufacturing, distribution, sales, supply, and recycling logistics.

On that note, let us understand the basics of automotive logistics, what is the meaning of automotive logistics, the key components involved and its role in manufacturing and distribution. In addition, we will explore how automotive are transported in India, the different types of automobiles used for freight transportation and more. Let’s first start with the meaning of automotive logistics.

What is automotive logistics?

Automotive logistics involves everything related to the automotive supply chain from planning and implementing, to control of the efficient movement and storage of automobiles, their vehicle parts or raw materials for production logistics. It ensures the safe transportation of finished products to their final destination.

In simple terms, the process of automotive logistics involves the movement of auto components, vehicle parts, replacement parts, and fully manufactured cards from supplier to consumer. Apart from this, the primary functions of automotive logistics include transportation and distribution, warehousing, loading and unloading, and data processing. And the entire process of automotive logistics can be categorised into three major parts. It includes:

• Inbound logistics
• Outbound logistics
• Other logistics services

Role of automotive logistics in manufacturing and distribution logistics

Now that we know the importance of automotive logistics, its role in manufacturing and distribution logistics is crucial. It helps in the optimisation of demand and supply, improving customer satisfaction, reducing costs, etc. In the manufacturing stage, it ensures the timely delivery of vehicle parts to the plants. In addition, also take cares of optimisation of production schedules and enhancing trade competitiveness.

Next, in the distribution stages, it takes care of the efficient distribution of fully manufactured vehicles. For instance, distribution of cars to dealers and customers.

Key components of automotive logistics

There are several key components of automotive logistics management that are integral to the smooth operations and success of the automotive supply chain. Let’s take a detailed look at all these components:

• Vehicle procurement and inventory management: It involves sourcing raw materials and components required for automotive manufacturing. To ensure there are no hiccups in the production phase related to delays or shortages, the process needs to be efficient. Also, an apt inventory management system aids in maintaining an optimal level of stock to meet production demands without incurring excessive storage costs.
• Production logistics: This aspect deals with the logistics inside the manufacturing plant. It includes the movement of components to assembly lines, managing the flow of semi-finished and finished products within the plant, and ensuring that the production process is uninterrupted and efficient. Techniques such as Just-In-Time (JIT) can be employed to minimize inventory and reduce waste.
• Quality control in logistics: Ensuring the quality of both incoming materials and outgoing vehicles is crucial. Quality checks at different stages of the logistics process help in identifying and rectifying defects early, thus preventing costly recalls and maintaining brand reputation.
• Transportation and distribution: This encompasses the movement of vehicles from the manufacturing plant to dealerships and customers. It includes route planning, vehicle loading, transportation mode selection (such as road, rail, or ship), and managing the risks associated with transit, like damage or delays.
• Aftermarket logistics: This component deals with the supply chain management of spare parts, accessories, and after-sales services. Efficient aftermarket logistics is vital for customer satisfaction and brand loyalty, as it ensures quick and reliable access to spare parts and services.
• Reverse logistics: This involves the process of returning defective or unwanted products back to the manufacturer or distributor. In the automotive industry, reverse logistics can be complex due to the size and nature of the products involved.
• Dealer and supplier relationship management: Building and maintaining good relationships with dealers and suppliers is key to a smooth automotive logistics operation. This includes negotiating contracts, managing orders, and ensuring timely payments and deliveries.
• Environmental and regulatory compliance: The automotive industry is subject to various environmental and regulatory requirements. Logistics management must ensure compliance with these regulations, including those related to vehicle emissions, safety standards, and transport regulations.
• Technological integration: Implementing advanced technologies like GPS tracking, RFID tagging, and logistics software can greatly enhance the efficiency and transparency of the automotive logistics process. This technology helps in real-time tracking of shipments, inventory management, and optimization of routes.
• Crisis and risk management: Being prepared for disruptions such as natural disasters, political instability, or supply chain disruptions is crucial. This involves having contingency plans, diversifying the supplier base, and maintaining flexibility in logistics operations.

Challenges of automotive transportation in India

Here are some of the challenges of automotive transportation in India:

1. Infrastructure Limitations: Despite having the second-largest road network globally, spanning 6.3 million kilometres, India’s transportation infrastructure still faces challenges. The uneven distribution of freight transportation modes, with a heavy reliance on road transport (66% of cargo), indicates the need for a more balanced and efficient transportation infrastructure​​​​.
2. Regulatory Hurdles: The implementation of the GST and other initiatives like the e-way bill system have streamlined logistics operations to some extent. However, the logistics industry still contends with regulatory complexities that can affect inter-state transportation and overall efficiency​​.
3. Congestion and Traffic: Urban congestion and traffic bottlenecks continue to be major impediments to timely deliveries, especially in metropolitan areas. These issues contribute to increased operational costs and delays.

Advantages of automotive transportation in India

Let’s now move ahead, and take a look at some of the advantages of the automotive transportation:

• Strategic geographic location: India’s strategic position offers significant advantages for the international automotive trade, particularly with Middle Eastern and Asian markets. The nation’s expansive road network plays a crucial role in facilitating this trade.
• Growing infrastructure: The Indian government is actively working to enhance the country’s road networks, with plans to construct 65,000 km of national highways. The Union Budget 2023-24 has allocated ₹ 2.7 lakh crore (US$ 33 billion) to the Ministry of Road Transport and Highways, highlighting the government’s commitment to improving logistics infrastructure​​​​.
• Diverse transportation modes and technological integration: The adoption of multimodal logistics parks and dedicated freight corridors is set to optimize logistics operations and reduce freight costs. Additionally, the integration of AI, IoT, and robotics is revolutionizing logistics operations, enhancing efficiency, and unlocking new opportunities​​.

Different types of automotive used for freight transportation in India

India has a diverse range of vehicles used for freight transportation. Some of the most common types of vehicles used for freight transportation in India are:

• Trucks: Trucks are the most commonly used vehicles for freight transportation in India. They are used to transport goods over long distances and are available in different sizes and capacities. For example, Tata Motors offers a range of trucks such as Tata Ace, Tata 407, Tata 709, and Tata 1109. Let’s talk about the various types of trucks involved in freight transportation in India:

-Light Commercial Vehicles (LCVs): Small trucks with a load capacity up to 3.5 tons, used for light goods transportation. Examples include Tata Ace, Mahindra Bolero Pick-up, and Ashok Leyland Dost.

-Medium Commercial Vehicles (MCVs): Mid-sized trucks with a load capacity of 3.5 to 16 tons, suitable for light to medium-weight goods. Examples are Tata 407, Mahindra Furio 7, and Ashok Leyland Ecomet.

-Heavy Commercial Vehicles (HCVs): Large trucks with a load capacity ranging from 16 to 49 tons or more, used for heavy goods transportation. Examples include Tata 1618, Mahindra Blazo, and Ashok Leyland 2518.

-Extra Heavy Commercial Vehicles (EHCVs): Multi-axle trucks for heavy or bulky goods, with a load capacity of 49 tons or more. Examples are Tata Signa 4923, Mahindra Torro 25, and Ashok Leyland Captain 5532.

-Trailer Trucks: Used for long-haul transportation of goods, these have a load capacity of 20 tons to over 100 tons, depending on the number of trailers attached.

Specific models and types of trucks in India include TATA ACE, ASHOK LEYLAND DOST, MAHINDRA BOLERO PICK UP, TATA 407, various EICHER models, TATA TRUCK (6 TYRE), TAURUS models, and different sizes of CONTAINER and OPEN-TRAILOR trucks​​.

Apart from this, there are also closed body or container trucks, heavy open body trucks, and light open body trucks used for transporting various types of goods, with different capacities and configurations​​.

• Railways: Railways are another popular mode of freight transportation in India. They are used to transport goods over long distances and are preferred for their cost-effectiveness and reliability. For example, Maruti Suzuki India started using railways to transport cars in March 2014, and other carmakers such as Tata Motors, Honda Cars India, Hyundai Motor, and Kia Motors India have also started using railways to transport cars.
• Waterways: Waterways are an underutilized mode of freight transportation in India. However, they are gaining popularity due to their cost-effectiveness and environmental friendliness. For example, the National Waterway 1 (NW1) is a waterway in India that runs from Haldia to Allahabad. It is used to transport goods such as coal, iron ore, and food grains.
• Airways: Airways are the fastest mode of freight transportation in India. They are used to transport goods such as perishable items, medical supplies, and high-value items. For example, Air India offers cargo services for transporting goods across India and internationally.

Innovations and technological advancements in automotive logistics in India

Innovation and technological advancements have been the driving force behind the evolution of the automotive logistics industry. The industry has been slow to embrace digital transformation, but with the global pandemic, increase in ecommerce and decrease in offline retail, the traditional supply chain and logistic activities had to change. And now companies are more and more dealing with growing costs, have trouble scaling their processes, unable to predict the demand, and rely heavily on manual labour.  Let’s have a look at some of the most promising innovations and technological advancements that are expected to advance in 2023:

• Hyper automation: Hyper-automation is a combination of various technologies that aim to enhance logistics efficiencies. Its major goal is to create a seamless transition between various areas: sales, suppliers, planning, purchases, and distribution, while also reducing human involvement. For example, cognitive automation is a combination of several technologies, i.e., AI + OCR (Optical character recognition) + RPA (robotic process automation). The combination of AI and OCR allows you to handle unstructured sales orders. Then you add this model to your RPA, and you can process information from and order, find items, and transport them – all without human involvement.
• Electric Vehicles (EVs): The development of electric vehicles is one of the most significant global trends in the automotive industry. Vehicle manufacturers are charging ahead with EV technology despite the many challenges they currently face. This is resulting in a significant increase in research and development (R&D) by vehicle manufacturers.
• Elastic logistics: Elastic logistics allows companies to scale the supply chain operations up or down depending on the market demand. It is specifically designed to withstand fluctuation periods and manage operations with more efficiency. Some of the most common challenges this trend tackles are underutilization of vehicles, warehousing limitations, and overstocking. Some of the many advantages of elastic logistics include optimized routes and enhanced transport efficiency.
• Internet of Things (IoT): IoT devices can be used to track shipments, monitor inventory levels, and optimize routes. IoT is another technology that is boosting innovation in logistics.
• Artificial Intelligence (AI): AI is already shaping the last-mile logistics industry today, and the next five years should bring even more revolutionary changes. Advancements in AI, analytics and infrastructure should lead to more widespread adoption and greater effectiveness.
• Blockchain: Blockchain technology is being used to improve supply chain transparency and security. It can be used to track the movement of goods from the point of origin to the point of consumption.