Crisis leads to change

In ordinary times, when we talk about something being viral we normally mean social media – a wildly popular video of someone falling over, or perhaps a puppy montage. In the extraordinary times that we now find ourselves, the meaning of the word has reverted back to being deadly serious. The emergence of Covid-19 (coronavirus) this year has ravaged the global population, sent entire nations into lockdown and brought business virtually to a standstill.

Dependent as it is on globalised supply chains encompassing hundreds of factory locations, multiple participants and different modes of transport, the automotive industry has not been one to escape the impact of the pandemic, which must now be regarded as one of the most serious challenges we have faced in our lifetimes.

As the crisis has grown, one after the other OEMs and tier suppliers around the world have announced factory shutdowns for extended periods of time. In the majority of cases in Europe, North America and Asia, production has been halted and millions of units lost. Those plants in limited areas that could still operate have faced a fight for transport capacity, with emergency airfreight in particularly high demand. At the same time, ports and shipping operations have struggled with backlogs and storage challenges, including for finished vehicles.

As I write this in April, we are still waiting to count the cost of such widespread disruption on global markets, the automotive industry and individual companies within our sector (however, see Ultima Media’s Business Intelligence preliminary analysis). We must certainly expect a severe blow to sales and revenues, and a fair few victims across the value chain as companies that were unprepared and unable to withstand a crisis on this scale simply collapse.

And this brief summary of the business implications, of course, does not even take into account the human cost – not only those who have sadly lost their lives, but others who have seen their jobs and livelihoods vanish, or their wages cut.

Yet already, there are signs of some sort of recovery – in terms of business, at least. China has now come back online and more recently some European vehicle-makers have resumed operations at certain locations; we can expect more such restarts imminently.

Getting back to business is one thing, but how that business might now be conducted is quite another. Will the coronavirus crisis change the face of the automotive industry forever? Will business back away from globalisation? Will supply chains become shorter? Will production operations drop just-in-time delivery and stockpile inventory? Will tracking technology providers make a fortune? Will manufacturers invest more in automated technology so as to reduce their dependency on poor, vulnerable human beings?

These are just some of the questions in my mind at the present time, and you can be sure that Automotive Logistics will follow up on these topics over the coming weeks and months. We will be doing so via a diverse array of digital content delivered directly to you by web or email, in our own adaptation to the current situation. This is why, in place of the print magazine you would have expected, you are reading this in digital format. I do hope the latest issue of Automotive Logistics and Finished Vehicle Logistics informs, enlightens and perhaps even entertains you during lockdown. But most importantly of all: stay safe.

Joanne Perry, Editor, Automotive Logistics group