Charting India's automotive logistics amid disruption, innovation

Pune hosted the Auto SCM Summit 2024, where industry leaders gathered to navigate the complexities of India's automotive supply chain. Key themes included inventory planning, geopolitical disruptions, technological advancements, and the transition to sustainable transportation.

The eighth edition of the annual conference and networking event Auto SCM Summit, presented by Indian Transport & Logistics News, was concluded on December 5, 2024, at the Sheraton Grand Hotel in Pune. Industry leaders convened to address the pressing logistics challenges facing India's automotive sector including inventory planning, geopolitical disruptions, the role of technology, and the shift toward sustainable transportation solutions. Experts also explored strategies to enhance supply chain resilience, leverage digital innovations, and embrace greener fuels.

Inventory planning: Using AI to handle disruptions
The annual automotive logistics conference kicked off with a panel discussion on the logistics challenges faced by the Indian automotive industry and the potential solutions to address them. The panel delved into the key issues impacting the sector, with the audience poll revealing inventory planning as the biggest logistics challenge, followed by dependency on imports, geopolitical disruptions, and freight rates.

Sanjay Suranglikar, Senior General Manager - Central Purchase of TATA AutoComp Systems, provided insights into the company's approach to addressing the logistics challenges faced by the Indian automotive industry.

He highlighted the key challenge of managing the supply chain amidst various restrictions and dependencies on imports, particularly from China. "There are a lot of constraints in our supply chain, like anti-dumping duties and Bureau of Indian Standards (BIS) restrictions. So, we have to take care of all of this while there is a dependence on raw material from China," he said.

To counter these challenges, Suranglikar emphasised the importance of diversifying the vendor base. "We have expanded our vendor base to other Asian countries," he explained.

He also stressed the need for close collaboration with the government and industry associations, such as the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association of India (ACMA), to address the raw material issues. "Working with the government on the key raw materials through the ACMA forum helps," he said.

In addition to managing the import dependencies, Suranglikar highlighted the criticality of maintaining optimum inventory levels. "Otherwise, we will have issues in terms of the costs," he stated.

On the same line and while acknowledging the audience poll results that identified inventory planning as the biggest logistics challenge, Om Vijayvargiya, Head – SCM & Logistics of Schaeffler India, emphasised the multifaceted nature of this issue. "Geopolitical situations are completely jeopardising inventory planning because the lead times are not fixed," he said.

He also shared the company's strategies and actions to address the critical challenge of inventory management and highlighted the importance of leveraging technology and data-driven solutions. "In the last one year, the visibility of the inventory has improved a lot. At this point in time, we can see the real-time position of our inventory starting from our origin plants," he explained.

Furthermore, Vijayvargiya discussed Schaeffler India’s adoption of artificial intelligence (AI)-based tools, stating, "These tools are helping us to improve our demand forecasting. We are already in an advanced stage of implementing a tool that can improve demand forecasting up to 80 percent from 50 to 60 percent."

In addition to technological advancements, Om emphasised the need for agility in production lines to better manage inventory levels. "Quick changeovers of the production lines are helping us to manage our inventory," he said.

Meanwhile, Atit Mahajan, Managing Director of CMA CGM India, highlighted the importance of collaboration and demand planning as key factors in ensuring effective supply chain management in the automotive industry. "The most important thing for us is having a very clear understanding of what will be the demand which you will be putting on our vessels or our aircraft," he stated.

Tech as enabler in automotive supply chain
The second panel discussion explored technology's transformation of India's automotive supply chain management. The discussion highlighted the auto electronics sector's growth potential, projecting an increase from the current $10.6 billion to $70 billion, with India's global market contribution expected to rise from 3-4 to 9 percent.

Mandar Vaidya, Director Materials Management - Region India, ZF Group, emphasised the critical role of technology in data security and building stakeholder confidence for transparent data sharing. He stressed the importance of human skillsets in technology implementation and the need for end-to-end visibility in responsible supply chains.

Addressing counterfeit products, Shiv Kumar Nanjan, Head of Global Key Account Management, Acviss Technologies, advocated for digital identity implementation for every product shipped across the supply chain, suggesting the need to move beyond traditional QR codes.

Nitish Rai, Founder and CEO of FreightFox, discussed technology's role as an enabler in transportation, highlighting how legacy systems struggle to adapt to evolving infrastructure. Using India's expressway development as an example, he emphasised the need for network benchmarking to match infrastructure improvements. He also addressed the challenge of underpowered trucks in India.

The discussions also emphasised the need for better integration of alternative transport modes and democratised booking systems.

Aritra Ghosh, Vice President of Manufacturing Engineering at Mercedes-Benz Research and Development India, discussed India's maturing automotive market, the growing importance of Global Capability Centres (GCCs), and the role of digital innovations in the automotive industry.

The panel also addressed regulatory compliance, particularly regarding sustainability reporting and cybersecurity standards, with special attention to the Carbon Border Adjustment Mechanism (CBAM).

Towards zero-emission trucks
Ashok Deo, Senior Researcher at the International Council on Clean Transportation (ICCT), captivated the stakeholders with a presentation on India's transition toward zero-emission electric trucks.

Deo highlighted the environmental impact of heavy-duty vehicles, which account for a significant portion of transportation emissions. “India’s logistics sector is at a crossroads,” he said. “Reducing emissions is not just an environmental imperative; it’s an economic opportunity.”

Despite the optimistic outlook, Deo acknowledged hurdles such as the high initial costs of electric trucks, limited charging infrastructure, and the need for enhanced driver welfare. Maintenance expenses, operational training, and infrastructure readiness were identified as critical areas requiring attention.

“Collaboration between policymakers, industry leaders, and technology providers is essential to overcome these challenges,” Deo remarked.

Deo concluded by presenting a vision of a logistics sector driven by renewable-powered electric trucks. “India has the potential to lead the global shift toward sustainable transportation. By investing in clean energy and cutting-edge technology, we can transform our logistics ecosystem,” he said.

Fueling the future with LNG technology
“At the greenhouse gas level, we’re close to 30-40 percent better than any other fossil fuel,” remarked A. Ramasubramanian, Chief Technology Officer of Blue Energy Motors. This statement encapsulated the tone of the fireside chat, titled “Fueling the future: LNG technology and its path towards automotive sustainability.”

This session featured Ramasubramanian and Charles Devlin D’Costa, Vice President of GreenLine. It focused on how liquefied natural gas (LNG) is emerging as a game-changing fuel for the logistics industry, bridging the gap between diesel and electric vehicles while reducing carbon emissions significantly.

“I wouldn’t call LNG a fully sustainable solution, but it is an interim solution,” Ramasubramanian stated. “It’s halfway between diesel trucks and electric vehicles—which presumably is a sustainable solution—provided you understand where the electricity is produced.”

Highlighting LNG’s environmental benefits, he explained, “It clearly addresses the needs of heavy-duty, long-distance trucking and performs better than CNG trucks.”

However, Ramasubramanian also acknowledged the financial hurdles involved in adopting LNG trucks.

“LNG trucks are 60-70 percent more expensive than diesel trucks,” he revealed, attributing the additional costs to the engine and fuel tanks. Despite the higher upfront investment, he assured that “customers can achieve a break-even point within 2.5-3 years, which is equivalent to diesel trucks.”

One of the key players in the LNG logistics space is GreenLine, a green mobility solutions provider under the Essar Group. At the end of 2023, the company announced a massive ₹5,000 crore investment to acquire LNG trucks. This included ₹850 crore for adding 1,000 LNG trucks to its fleet in FY24 and another ₹4,000 crore to deploy 5,000 more trucks in FY25.

Sharing GreenLine’s journey, D’Costa said, “GreenLine rolled out the first LNG truck in India around two years ago. Today, we have a fleet of around 600 trucks.”

D’Costa emphasised that LNG trucks are not only more environmentally friendly but also more fuel-efficient than their diesel counterparts. “LNG is up to 30 percent greener and 15-20 percent more fuel-efficient than diesel trucks,” he noted. He also highlighted how GreenLine supports its customers’ sustainability initiatives: “To help businesses advance their ESG goals, we provide a green certificate that directly contributes to their sustainability reports.”

India's auto growth relies on air cargo expansion
The third panel discussion underscored the essential role of air cargo in supporting the expansion of India’s automotive industry. Moderated by Roland Weil, Vice President Sales-Cargo, Frankfurt Airport, the discussion explored infrastructure development, multimodal transport, strategic advantages of air freight, market volatility and regulatory complexities.

A key focus was on India's emergence as a reliable manufacturing hub within global supply chains. Thakur Purushottam Singh, Business Head of GMR Goa Air Cargo, emphasised the significant capacity offered by the new greenfield cargo terminal at Mopa International Airport in Goa and its proximity to automotive manufacturing hubs.

Hemant Rai, Head of Auto Division at Tiger Logistics, provided insights into the evolving dynamics of cargo movement, noting a current split of 60 percent ocean and 40 percent air. However, he stressed that air cargo accounts for approximately 80 percent of market share by value, highlighting its critical role in transporting high-value automotive components and finished vehicles.

The panel explored the specific advantages of air freight within the automotive supply chain. Its speed is paramount for time-critical shipments, such as sample parts for product development and urgent replacement parts to prevent costly production line disruptions. This “just-in-time” approach is crucial for minimising downtime and maximising manufacturing efficiency.

The impact of global events on air freight was also addressed. Instances of geopolitical instability, such as the Red Sea crisis, have caused congestion and price increases at major seaports and airports. However, panellists noted that alternative routes and carriers, including those with available belly space, along with bonded trucking as part of a multimodal strategy, provide effective mitigation strategies. The growing investment by global companies in India’s automotive sector reinforces the need for robust and efficient logistics solutions.

Cost-effectiveness in logistics was recognised as a key consideration. While speed and reliability are vital, pricing remains a significant factor. Although air freight is generally more expensive than other modes, the potential cost savings from reduced downtime, optimised inventory management, and faster time-to-market can often justify the higher investment. The improving road infrastructure in India is also making trucking a more competitive option for certain routes, especially when air freight prices experience significant spikes.

How logistics is driving India’s automotive manufacturing growth?
The fourth panel discussion titled “From spare parts to accelerating beasts: How is logistics as a sector fuelling automotive manufacturing in India?” delved into logistics's critical role in transforming the automotive industry. The session brought together experts to share insights on the evolving supply chain, the impact of technology, and strategies to navigate global disruptions.

While setting the stage, Pathak struck a note comparing the Indian automotive industry to a “musical symphony of parts, people, and processes,” highlighting logistics as the backbone ensuring this symphony runs on time and efficiently.

The panellists discussed how global supply chain disruptions, such as the Red Sea crisis, have underscored the need for flexibility and resilience. Sahil Seshadri, Head of Global Sourcing - India & SEA, Knorr-Bremse Systems for Commercial Vehicles India, shared how his company quickly reconfigured supply chains during the disruption.

“We can’t just worry about what we are buying and from where — we must also consider how it will reach us,” he said. While sea freight remains the preferred mode, geopolitical uncertainties require companies to diversify sourcing strategies and evaluate options like re-routing and alternative suppliers.

Seshadri stressed the importance of preparing for future challenges: “Especially for critical components that cannot be fully localised, a diverse sourcing strategy is essential to keep supply chains running smoothly, even if one part of the world is affected by disruptions.”

Beyond cost considerations, timely delivery and resilience have become paramount. Panelists emphasised the need to plan for potential geopolitical disruptions, ensuring that supply chains can withstand shocks.

Kedar Rele from Umicore Autocat explained, “Our supply chain is still dependent on global networks because precious metals used in production are not found in India. To mitigate risks, we’ve built a chain of tie-ups across different stages of the supply chain, allowing factories to continue operations even during major crises.”

Highlighting innovations in warehousing, Mudit Dobhal discussed the importance of models like plug-and-play facilities and large distribution centres in supporting the automotive industry’s growing demands. Efficient warehousing not only reduces costs but also enhances speed and reliability in the supply chain.

Overcoming complex challenges of EV for a sustainable future
This fifth panel discussion at the Auto SCM Summit 2024, "Changemakers of Tomorrow: Redefining EV Logistics," addressed the complex challenges of evolving EV logistics in India.

The discussion highlighted logistics as the crucial final link in the EV supply chain, often bearing the brunt of inefficiencies. Panellists advocated for its strategic integration into core business decisions. Key obstacles identified included reliance on imported components (particularly for trucks and buses), fluctuating government policies (especially subsidy changes), and the lack of widespread, reliable charging infrastructure, leading to range anxiety.

A significant focus was on the unique challenges facing the EV sector, including its import dependence and complex regulatory environment.

Manjula Girish, Business Head EVCS PVI, Delta Electronics India, outlined her focus on charging infrastructure and power electronics, highlighting supply chain challenges for larger vehicles. Despite some progress in localising two- and three-wheeler components, significant import reliance (80 percent) persists.

Manuj Malhotra, VP-Strategic Sourcing & Supply Chain, Omega Seiki Mobility, focused on three-wheelers in last-mile logistics, noting the increasing influence of ESG and BRSR norms driving the shift to near-zero-emission EVs. However, policy volatility, such as unpredictable subsidy changes, impacts demand. “Strategic planning, cost efficiency, localisation, and consistent government support are crucial for mitigating risks and driving sustainable growth,” he said.

Deepak S, Head of Logistics, Ather Energy, provided a broader view of EV supply chain challenges, including disruptions from geopolitical events and global crises. He described the EV ecosystem as operating in a VUCA (volatility, uncertainty, complexity and ambiguity) world, marked by price fluctuations, geopolitical conflicts, and supply disruptions. He also highlighted the resilience of logistics functions in navigating this dynamic environment.

A key theme was the need for internal synchronisation within organisations, aligning planning, procurement, and logistics to navigate external challenges effectively. The panel also addressed the pivotal role of regulations, requiring close collaboration between manufacturers and the government.

Digitalisation was another focus. While advanced technologies offer efficiency gains, panellists emphasised the importance of robust foundational processes (-logistical hygiene) as prerequisites for successfully leveraging digital tools.

Reverse logistics emerged as a key concern. Deepak S of Ather highlighted challenges in managing battery returns and repairs, particularly in the two-wheeler segment, including inadequate service networks, a lack of organised players, and reliance on smaller, less efficient providers. The high cost and suboptimal service levels of existing reverse logistics solutions were also discussed.