This page explains why finished vehicle logistics is a unique environment for damages to occur. We explain the dynamics, how damages happen and why damage reduction is important.
Finished vehicle logistics is the term used to describe all the activities that happen to a vehicle from the time it leaves the factory until it reaches the dealer.
The main activities are principally transportation – by road, rail or sea/waterway. Other activities will include storage, post-production modifications or pre-delivery inspections that all vehicles must undergo prior to final handover to the end customer.
Transport, storage and workshops that are used for finished vehicle logistics are typically designed and can only be used for vehicles. Companies that provide these services are also typically specialists with staff who are dedicated and trained only in vehicle handling. The trucks, trailers, barges and ships used are also purpose built and not used for any other goods transport.
How damages arise
New vehicles are high value items and unlike any other high value consumer goods, they are not always protected for delivery.
Therefore it is not a surprise that vehicles get damaged as they travel from the factory to the dealer – a journey that can sometimes be halfway around the world!
Damages happen for many reasons, but one of the main areas that damage occurs is when the vehicle is being handled; driven on and off the various modes of transport, or into and out of storage compounds.
Other causes include adverse weather (notably hail) or airborne contamination from industrial fallout. The combination of large numbers of vehicles exposed to weather and contamination present catastrophe risks to be understood and managed.
Why damage reduction is important
Logistics service providers (transporter, storage or workshop owners) endeavour to create processes and training programmes for their staff to raise the awareness of how damages may be avoided. This has significantly reduced levels of damage to today’s European average of 3%. Whilst improvements have been made, it still costs the European sector alone up to €200 million each year in damage costs. To this figure must be added administration and insurance costs.
In fact, even the smallest damage to a vehicle has a disproportionate result in that not only will it cost someone to repair it back to the new vehicle standard required, the vehicle will be delayed in its final delivery. With so much emphasis on lead times, delays cause damage to the reputation of manufacturers'.
Whilst the cost of damages may be insured, or may be recovered from logistics service providers, damage rectification simply adds inefficiency and administrative burden into the logistics process.