BMW’s future logistics partner

Continuing our focus on future logistics, we look at one of BMW’s most important logistics partners and how they connect with the carmaker. Simon Duval Smith reports

ARS Altmann has won some important business with BMW on in-plant work with great connectivity elements and I ask Dr. Maximilian Altmann, Chief Executive Officer and Member of Executive Board at ARS Altmann AG, how this came about and what was so special about ARS’s offering? He says that both integrity and flexibility were key. “For a long time, we have proved absolute reliability and flexibility to ensure stability of execution. Furthermore, open communication and full availability in combination with dedicated staff, profound knowledge of needs and instant adjustments of capacity is our excellence,” he says.

BMW's Connected Distribution is an important part of their production and logistics operations around the world and I wondered how ARS 'meshes' with BMW's IT infrastructure. Dr. Altmann says that there has been an onus on the logistics provider to make investments in its infrastructure and its level of connectivity. “ARS is continuously investing in digitalisation and process optimisation using reliable, modern technology. The ARS IT Infrastructure has already been connected to BMW’s IT Infrastructure for years via electronic data interchange (EDI) interfaces, we are currently developing many tools to meet our customer’s needs with regards to transparency, availability and reliability of data.”

The future of a great partnership

Looking to the future, I ask Dr. Altmann if there is BMW business in the pipeline for ARS. He says that his company’s global reach is important and that this will pave the way for more work with the carmaker. “BMW is the one of our top three customers. We have managed to keep this portion while multiplying our total turnover over the years, this means that, developing our company, we kept up the pace with BMW and this makes us very proud. In the last few weeks we have indeed gained more business but more on the spot and storage direction. And we are working on concepts for international solutions mutually. 

“ARS is an international company and we are certainly committed in gaining business with BMW in countries where we have strong assets, Italy being the first with 5 compounds, 250 domestic trucks and more than 350 people.”

The logistics provider is well-known for its work in outbound vehicle movements but I wondered if future business could include inbound and in-plant work. Dr. Altmann says: “We have always been focusing on finished vehicle logistics and that will remain our main business in the future.”

A global partner for a global OEM

BMW has diversified its production footprint to include the US, China and South Africa, among other global locations and its vehicle distribution network is similarly widespread. I ask Dr. Altmann how a logistics provider such as ARS can follow an OEM globally and offer really competitive services in every region that the OEM is present and when would he choose to use local subcontractors. He says: “It is our job to simplify the business of our customers. If this job is required abroad, we go. Logistics is complex and diversified for a single service provider and it is seldom to be a specialist in all sub-areas.

“This is why it is common to work with local subcontractors and thus bundle the respective competencies in a purposeful way in order to be able to deliver tailor-made concepts to the customer.”

Green and sustainable transport

ARS trialled a car carrier powered by liquefied natural gas (LNG) in February last year and I ask Dr. Altmann to give me an update on this and other green transport initiatives at the company. He says that sustainability plays an important role in the company. “For this reason, we have comprehensively dealt with the topic of alternative drives and developed a corresponding strategy. We currently use both a purely electric truck and a truck powered by LNG. Our electric truck - in 2017 the first fully electric truck in automotive logistics in Europe - has been in operation since November 2017, the LNG truck since February 2018. Unfortunately, the infrastructure required for this in Germany is still very limited; legislators must make their contribution to making electric and LNG vehicles more attractive for companies. At the moment, however, we are already in very productive talks with customers, the local authorities and the state in order to actively drive forward the expansion of the charging and/or refuelling infrastructure for alternative propulsion systems - i.e. LNG, charging facilities and also hydrogen for strategic approaches. 

“We will certainly increase our fleet massively, this one part of our contribution in CO2 reduction, a small part, the biggest is a shift to rail where we still have extensive plans and concepts.”

Railcar shortages - building one’s own wagons and network

Many logistics providers have told us at Automotive Purchasing and Supply Chain that finding enough car carrying railcars is a problem; they take too long to build and get certified, particularly in Europe. Dr.Altmann says that his company is in good shape in this respect and that it commissions and builds them itself. “We are at present very well equipped with a constantly growing fleet of currently more than 3,000 open and closed wagons. Thanks to our dedicated maintenance team, we are able to ensure that our existing fleet remains at the highest technical level and thus keep downtime to a minimum. In addition, we have a long-standing partner who manufactures our new wagons reliably and in line with our requirements.

“Since the specifications of a transport wagon are very particular due to legal requirements and our special demands, the construction of new wagons logically takes some time. It is difficult to find wagons, so we decided to develop and build them by ourselves. We are currently doubling our fleet.”

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The New Silk Road - who will take the lead in cooperation?

The New Silk Road/One Belt route is being promoted by logistics providers but there does not seem to be the economies of scale required to make it really viable for finished vehicles. I ask Dr. Altmann if more cooperation and load sharing among OEMs is the answer. “The promotion of the silk road - both by politics and media - makes a participation for companies like ARS very interesting and prestigious. The load factor plays a decisive role in the profitability of such projects. Compared to that, economies of scale play - as in our industry in general - a much smaller role. Bigger volumes, however, can allow a more efficient combination of different model types and therefore improve the loading factor.

“A cooperation between different OEMs by bundling their volumes could improve the situation but would only have a bigger impact if the model types of the participating OEMs would differ with respect to their dimensions.”

I ask Dr. Altmann if these moves can be instigated more by companies like ARS or are there competition confidentiality issues. He says that the company is always trying to offer improved solutions: “This is always our aspiration. Achieving network effects within our customer portfolio could be such an improvement but it is not a priority at this development stage of installing a regular traffic of finished vehicle transports on the Silk Road. With the scope of periodical round trips, however, such solutions become more likely, as not only confidentiality restriction would be less significant but matured solutions would also enable a more efficient structuring of the volumes. Such cooperation between different OEMs would be most likely the result of the constant exchange we are having with our internationally acting customers, though this would be very unusual within our industry.” 

Bottlenecks and solutions

I ask Dr. Altmann where he finds bottlenecks in the company’s operations - are they at borders or ports, or such things as shortages of traction locomotives on the rails? He says that numerous external factors influence ARS’s business activities. “In the rail sector, these primarily include the infrastructure: a heavily overloaded rail network, many construction sites on the lines and a shortage of traction due to a lack of locomotive drivers complicate the smooth organisation of transports. In addition, communication with the major state railways is sometimes difficult. The weather also plays a decisive role as storm damage in particular causes line closures and thus impairs the transport system. Often the unloading capacity at the destinations is not reliable or limited, resulting in delays. Similarly to rail transport, road transport is also affected by weather conditions. In recent years, traffic has generally increased, leading to delays.

“However, our biggest problem in this field is the lack of qualified drivers, which we are countering with various measures, including the training of new drivers in our in-house academy, the ARS Academy. In principle, we try to distribute as many loads as possible by rail, but this is not feasible in local transport.”

Brexit and adopting WTO rules - challenges ahead

I ask Dr. Altmann the inevitable Brexit question - what is his take on the situation and how will it develop for logistics providers and their customers? “We see massive efforts to secure storage space and from many manufacturers certain plans how to reroute lanes for exports and imports, change or add ports. As the alternatives are limited, the volumes high and capacity on the market already rather exhausted we all will face some issues. But we are prepared to add some capacity and are already supporting some customers.”

Finally, I ask him if the automotive industry people that he deals with can assimilate and use the WTO rules in Europe, in the case of a hard or other Brexit, to maintain just-in-time deliveries and smooth border crossings? He says this will take time: “In our opinion, this will not be possible immediately, so we expect a certain period of ‘on hold’ status for goods and vehicles on both sides and then a reinitiated workflow.

“However, it is still questionable with what effort, additional time and degree of documentation the specific processes can be resumed. We do concentrate on solutions that are prepared to offer more dedicated capacity.”