This spring, on the parking lot of the long-defunct Century Plaza Mall in Birmingham, Alabama, stand rows and rows of new Mercedes-Benz vehicles.

The cars, mostly sport utility vehicles, occupy nearly every parking space on the property as they have for weeks, starting well before the first day of spring.
“This is the first time we have a global launch for all markets simultaneously and not a phased launch by markets,” says Tuscaloosa County-based Mercedes-Benz US International (MBUSI) spokesperson Felyicia Jerald. “As a result, we are using a number of locations in the plant and off-site locations nearby for the storage of those vehicles as a temporary storage for our vehicles.”
When asked more questions regarding the reasoning and timing for the move, a Daimler spokesperson said, “We cannot answer your questions as they … address internal information and information that would be relevant for our competitors.”
While the German carmaker will not say more about its plans to get the vehicles to market, the move does highlight the complexities involved in getting finished vehicles from the assembly line and marshaling lot to the dealerships. And today, evolving government regulations, and even the auto manufacturing industry’s move to produce more hybrid and electric vehicles are having an impact on automotive outbound logistics.
A Growing Industry
“Outbound logistics is getting the product out to the market, to the dealers and to the customer,” says Kristin Dziczek, vice president of Industry, Labor and Economic for the Center for Automotive Research, an independent nonprofit based in Ann Arbor, Michigan.
“And, it’s complicated,” says Dziczek, “because you’ve got to get the right vehicles and the right configurations in the right places. And, some of it involves exporting vehicles and

importing vehicles through the border in order to get what the customer needs.”
It is a critical part of any automotive manufacturer’s overall value chain, and many auto manufacturers rely on third-party logistics providers to get their fresh-off-the- assembly-line finished vehicles off their marshaling yards and onto the markets, both domestic and overseas. The modes for transporting vehicles to dealerships is generally by train, truck, overseas shipping or a combination of modes, depending on the market locations.
“Generally, when production is running at a fairly decent speed, and the market is going well, then there is very little holding of inventory before shipping,” says Dziczek. “It usually goes directly to the trains and onto the trucks and onto the dealers. … Manufacturers want to get that product out to the markets fairly soon after it’s produced.”
The fact is, the automotive logistics industry is growing. “The automotive logistics market is estimated to be USD 284 billion in 2018 and is projected to reach USD 472.9 billion by 2025 at a [compound annual growth rate] of 7.55 percent,” says a report by the B2B research firm MarketsandMarkets [CQ]. “Increasing vehicle production, upcoming infrastructure projects, and the advent of electric vehicles are the major reasons for market growth.”
Moreover, a March 2019 IBIS world industry market research report estimates a 1.2 percent growth in the vehicle shipping services industry alone with revenues expected to peak at $12 billion this year.
And outbound logistics has changed as automakers have changed their strategies for choosing locations for their assembly plants. That is because in the past, automakers used a branch plant strategy where they established plants around the country and made their products for a particular region of the country in a plant closer to the market, Dziczek says.
“Now they’re consolidated with a platform strategy where one or two plants make all of the vehicles on a platform,” she says. “The logistics are much more important these days than they were 30 or 40 years ago when plants were more dispersed throughout the country and closer to the markets.”

Trains and Trucks
In 2017 in the United States, railroads moved approximately 1.8 million carloads of motor vehicles and parts, according to the Association of American Railroads. In fact, it says that just one train can carry as many as 750 vehicles at a time.
Additionally, some 75 percent of new cars and light trucks purchased in the United States reached their markets by way of freight rail in 2017, and 17.22 million cars and light trucks sold in the United States came by rail, according to the organization.
“As auto manufacturers opened new plants in states like Georgia, Kentucky and California, railroads laid new track in and out of plants and built specialized rail yards to enhance productivity,” the Association reports on its website.
Besides the railroads, change is also happening in the trucking industry, which, in turn, is having an effect on finished vehicle carriers. One major new development has been the mandated use of electronic logging devices (ELDs).
Traditionally, truckers have relied on paper logs to document their drive times. But a congressionally mandated regulation under the Federal Motor Carrier Safety Administration (FMCSA) went into effect in December 2017 that says drivers in trucks with a gross weight of more than 10,000 lbs., must now use ELDs to log their driving hours and rest periods.
The FMCSA says, “The rule is to create a safer environment of the nation’s truck drivers and track duty status data more easily.”
ELDs automatically records the time a truck is in use, thereby showing whether or not drivers are complying with the federally mandated limits on the number of hours they can work without stopping to rest. Currently, property-carrying drivers can only drive 11 hours after 10 consecutive hours off.
But while ELDs have been around for several years, a 2018 article in Automotive Logistics, “2018 Predictions: The Hot Spots,” says some trucking companies have voiced worries that the new rules over rest and reset times will cut productivity.
Managing EV Vehicle Shipping
Another factor that could impact outbound logistics is the automotive industry’s move to produce more hybrid and fully electric vehicles and electric batteries. That is because lithium ion batteries have higher energy densities and therefore increased risk of possibly catching fire. As a result, transporting them requires precautions.
In an article for Supply Chain Dive last February, Sven Dharmani, Ernst & Young’s principal and performance improvement and global supply chain leader for the automotive sector, said that it is unclear, however, how much of an impact lithium ion batteries will have on transportation logistics going forward.
He speculated that companies may opt to produce lithium ion batteries in-country and transport them on the road rather than shipping them overseas.
“Only a couple percent of vehicles have those batteries,” said Dharmani. “Once that number starts to climb, we’ll get more understanding of what the regulation needs to be and how it needs to be managed and contained.”