**Mexico**: Volkswagen Mexico confronts a supply chain crisis due to record vehicle exports to North America. The company partners with Maersk to launch the Cars in Containers program, revolutionising its transport logistics and significantly improving delivery efficiency and damage rates.
Volkswagen Mexico is currently navigating a significant challenge as its vehicle exports to North America have reached unprecedented levels, resulting in a pronounced supply chain crisis. The company, one of Mexico’s largest automotive exporters, has historically relied on a logistics model that utilised rail and Roll-on/Roll-off (RoRo) shipping methods to transport finished vehicles to the U.S. and Canada. However, as demand surged, Volkswagen faced several logistical hurdles including capacity shortages, service unreliability, and a build-up of inventory, which jeopardised both production flow and timely delivery commitments to dealerships.
The situation escalated to a critical juncture when a key rail service provider experienced shortfalls, compelling Volkswagen to temporarily halt production due to congested storage facilities filled with completed vehicles. This congestion not only hampered effective inventory management but also increased risks of vehicle damage and customer delivery delays.
In response to these escalating issues, Volkswagen Mexico sought collaboration with Maersk Mexico to develop a new logistics solution. The outcome of this partnership was the launch of the Cars in Containers (CIC) program, an innovative shift in how the company exports its vehicles. By opting to transport finished cars in ocean containers rather than relying solely on traditional rail and RoRo services, Volkswagen sought to alleviate the pressure on its supply chain.
The CIC initiative, although not entirely novel within the realm of automotive transport, represented a substantive departure from Volkswagen’s established North American export strategy. The Maersk team collaborated with Volkswagen’s logistics professionals to create a process designed to minimise operational disruptions and to mitigate risks of damage during transport. A meticulous integration plan ensured that the implementation of the new strategy would align seamlessly with existing operations.
The transition to the CIC model has yielded both immediate relief and longer-term operational advantages. Notably, space optimisation has been achieved, allowing Volkswagen to alleviate the backlog of finished vehicles in storage yards and thereby resume production. Additionally, damage rates for vehicles during transport significantly decreased to an impressive 0.025%, marking a dramatic improvement compared to previous methods employed.
The containerised transport solution also introduced enhanced flexibility to the supply chain, enabling Volkswagen to access new routing options that circumvented congested railways and RoRo capacity issues. Consequently, the company has improved its speed-to-market capabilities, with timely deliveries achieved to essential U.S. markets including Midlothian, Jacksonville, and Baltimore—crucial for sustaining customer satisfaction.
During the initial rollout of the CIC programme, over 8,100 finished vehicles were successfully shipped, demonstrating both the efficacy of the new logistics approach and its potential scalability. Recognising the importance of this innovation, Volkswagen and Maersk are now exploring further enhancements, including the potential integration of air services to provide greater flexibility in critical shipments.
As Volkswagen Mexico continues to adapt and evolve its logistics strategy, the CIC initiative is now seen as a foundational element of a resilient supply chain that can better accommodate future growth. This collaboration underscores the importance of agility in supply chain design, particularly in the automotive sector, where timely delivery is closely linked to brand reputation and customer satisfaction.
Volkswagen’s recent experiences underscore the dynamic nature of logistics in contemporary trade and the pressing need for innovative solutions in the face of evolving challenges.
Source: Noah Wire Services
Subscribe to Industry Updates
