Despite its advantages as a relatively low-cost manufacturing location, Central Europe's high logistical costs are increasingly emerging as a barrier to supplier expansion in the region, according to an ArvinMeritor executive.

Supply-chain optimisation specialist Jan Huijens told delegates at JD Power's Automotive Forecasting Conference in Frankfurt today that the region suffers from a lack of logistics density and infrastructure.

The sector is characterised by many small and independent logistics providers, he said, and they have limited reach and breadth of logistics services.

"And there are trade-offs - should we deal with local suppliers or global logistics providers? There are benefits with both approaches. And a further consideration is that if we are using Central European facilities to supply back into Western Europe, low costs can be offset by transport penalties."   

"We utilise a broad mix of logistics providers to meet our needs," Huijens said.
 
"We are working with existing carriers to expand their reach and services," he added.

"But some of the local providers are variable and some of the infrastructure is poorly developed," Huijens

Huijens told the conference that local providers are weak in part-load services and shared user infrastructure but they can provide a good solution if the volumes are sufficient.

Global logistics providers have better integration with existing networks and services, he said, and they can develop density in network and scope while being cost-effective for lower volume product. They can also provide seamless integration with Western European networks.

"We expect that ongoing mergers and acquisitions will provide opportunities for consolidation of contracts and supply base reduction," he said.

Dave Leggett