b'MARCH 2025AUTO LOGISTICS 41(TROUBLEcontinued from page 40) high-end European premium models will probably befurthererodealreadyslimprofitmarginsofroad consultancy providing market research and analysisless affected than those in the mainstream category. freight transport, which range between 0.1% and 2% tothelogisticsindustry,toldAJOTtherewasnoWhile finished products could suffer most, thereand push its members out of the market in favor of doubt that tariffs on European car exports to the USmay be gains for containerized components. low-cost providers from Eastern Europe.would have devastating consequences, German andWithcarcarrierssettobehithard,theresCommenting at the time, Rico Luman, senior Italian manufacturers being the worst affected. likely to be some front-loading of vehicles to the USsector economist, Transport and Logistics, at Dutch Unless the already weakened sector can findthis month, such as we saw with imports of Chinesebank ING, said that LSPs and haulers had felt the new markets for its vehicles (and this will be tough)vehicles into Europe ahead of the EU tariffs.pain of lower unit production in automotive for a there will inevitably be significant job losses. Evenprolonged period but that contract rates were decent ifPresidentTrumpdoesntgothroughwithhisC ostp ressures , s limm arGins and pretty much stabilized moving into 2024. How-threat or the EU agrees to his demands to reduceTurningtothecurrentstateoftheautomo- ever,sincethen,carmakersprofitmarginshave tariffs on US cars, the uncertainty will inevitablytive market in Europe generally, Schnelle said thatdropped and they have become much more active in impact on business plans until the political environ- over the past year, the ECG has seen an imbalancereducing costs, and this has cascaded down to their ment becomes more stable. between demand and available vehicles. suppliers in transport and logistics.The threat of tariffs has left automotive logis- Many (if not all) manufacturers expected BEVTrucking is a low-margin business, so absorb-tics specialists in a state of limbo. Should they brace(Battery Electric Vehicles) sales to grow much faster,ing a significant haircut [in freight rates] will be themselves for a sharp dip in demand for EU-madewhich, as we know, did not happen. Chinese manu- difficult.LSPshavehighermarginsbutprobably vehicles in the US or will the trade war initiated byfacturers focused on BEVs.However, the situationwont take the majority of it. The outcome could Trump end up being simply no more than bluster toat ports and (inland) vehicle compounds is not solelybe more insolvencies among SMEs and even more enhance a bargaining position? due to Chinese OEMs but rather to certain modelshauler activity shifting to companies or subsidiaries TheBrussels-basedAssociationofEuropeanthatwerelessindemandthanexpected.Overall,based in Eastern Europe, Luman noted.Vehicle Logistics (ECG), whose members own ormanufacturers have adjusted by bringing more hybridAs the first quarter of 2025 draws to a close, operate more than 470 car-carrying ships, 14,000vehiclestothemarket,includingChineseOEMs,the European automotive market continues to face purpose-built railway wagons, 23 river barges andwho, for the first time in December 2024 had a higherexcesscapacity,mainlycausedbyongoinglow morethan26,000roadtransporters,candolittleshare of non-BEV imports into Europe. sales, according to Luman. We dont expect any else but wait and see, its executive director, FrankSchnelle recalled that it was only two years agomajor change this year. Our forecast for Europe is Schnelle, told AJOT. that the ECGs members were facing demands from+1.5% for new registrations which last year were ThepotentialimpactofincreasedtariffsisOEMs to invest in more capacity.still only 82% of the pre-pandemic level.difficult to predict. There are ongoing discussions,They complied but today are once again feel- As for Chinese automakers share of the Euro-possible counter-measures, and negotiations. In theing the cost pressures from the market, while overallpeanmarket,Lumanrevealedthatthatthishas mid-term, both production in Europe for export andcosts have not decreased. The financial situation ofshrunk somewhat in the second half of 2024 follow-imports could be affected. We will further observesome OEMs is having an impact on these high-costing the imposition of EU import tariffs. the developments. pressures. However, I am not aware of any bank- However,itwontbetheendofChinese ruptcies among our members. brands making inroads in Europe. BYD is going f ront -l oaDinG ofv ehiCles to theusEarlier this year, German premium car manu- to produce in Europe (Hungary) and is certain to Rico Luman, senior sector economist, Transportfacturer Mercedes-Benzs decision to cut its freightpush ahead in the coming years as these EVs are and Logistics, at Dutch bank ING, said the increasecosts by 10%, resulting in a corresponding reductionperceived as good quality.in US tariffs could have a significant impact on Euro- in freight rates, caused uproar among the countrysIn February this year, Germanys BLG Logistics pean brands such as Volvo, VW and Mercedes butSME road haulers serving the automotive industry. signed a partnership agreement with Chinas Cosco also for those without a manufacturing footprint inTrade body BGL claimed such a move, thoughtShippingCarCarrierswhichwillseetheBLG the US. However, given their low-price elasticity,to be industry-wide, lacked legitimacy and would(TROUBLEcontinued on page 42)A Leading Ocean Shipping& Logistics CompanyLiberty Global Logistics LLC 516-488-8800LibertyGL.com 1979 Marcus Avenue Suite #200, Lake Success, NY 11042'