Many sectors in Europe, including the automotive industry, are currently being influenced by an explosive growth in freight prices and substantial delays when it comes to the delivery of goods from the Far East. BORG Automotive, representing the brands: Elstock, DRI, TMI and Lucas, is benefitting from having European production facilities.
The global arrival of Covid-19 has had many consequences. One of them was freight forwarders having to stop a large part of their shipments from Asia to Europe in the first half of 2020, due to shutdowns. This caused thousands of empty containers to be left in Europe and the United States.
When the Western European demand for goods from Asia suddenly increased in the second half of 2020, it also increased the competition among freight forwarders to get hold of the containers and thereby raised the prices and lead time substantially.
Consequences for the automotive industry
The automotive industry is one of the sectors being hit by both price increases and delays, although the effect differs from company to company based on product types, among others. Insecurities and fluctuations, like those mentioned, create longer lead times and put stock capacity and the ability to deliver in general under pressure.
In some cases, the issues have a smaller effect, whereas in others they mean lost potential sales.
BORG Automotive is close to the customers
BORG Automotive is one of Europe’s largest companies in the automotive parts remanufacturing industry. They remanufacture nine different product groups at their own sites and have customers in both the OES market and the independent aftermarket. They recognize the increasing issues in the European supply chain.
Ernst Kildegaard, Group Supply Chain Director, says:
“It is a unique challenge our industry and many others are facing at the moment. However, it has highlighted the positive effect of our production facilities being placed in Poland, the UK and Spain, close to our customers. This means shorter lead times and that we can provide a high level of security and consistency of supply. Thereby, our customers have the possibility to tie up less capital in stock, keep stock levels relatively low and still be able to supply their customers with goods. Furthermore, our production capacity is geared towards delivering to even more customers moving forward.”
It is currently expected that the freight issues in terms of goods from Asia will last far into the second half of 2021.