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Logistics

How logistics companies can thrive during disruption within the wholesale vehicle market

Dec 31, 2018

By Jim Williams, Senior Vice President of Logistics for Cox Automotive Inventory Solutions

The growth and disruption of the digital marketplace is hard to miss in industries like retail and entertainment. A range of companies, including Amazon, Spotify and Netflix, are replacing the traditional businesses of yesterday.

While not as visible to the casual observer, that same disruption is taking place in the wholesale vehicle marketplace. It’s an industry long-rooted in physical auctions with buyers and sellers showing up at common locations to inspect and bid on used vehicles.

The wholesale vehicle marketplace, though, is changing fast. Sales to a digital buyer now account for 45 percent of all sales at Manheim, North America’s largest wholesale vehicle remarketer, and the expansion of the digital marketplace shows no signs of slowing.

What does this shift to digital mean for logistics companies tasked with transporting these high-value products between buyers and sellers? It means more opportunities and challenges. Logistics companies are needed more than ever to get vehicles to the right place at the right time, but the disruption of the digital marketplace also demands logistics firms embrace significant changes of their own.

Increased Demand for Distances Near and Far

First, let’s take a look at the opportunities. Despite the shift to digital auctions, vehicles still need to be transported. In fact, the digital marketplace for sales has created an even greater demand for physically moving vehicles between buyers and sellers. It’s brought down geographic barriers. Dealers can now more easily find vehicles anywhere in the U.S., which has increased demand on logistic companies to create plans for longer hauls.

At the same time, demand also has increased for more frequent, shorter hauls. The rise of new mobility solutions, including ride-hailing and car-sharing services, has created a new set of fleet management needs. Vehicles need to be moved more frequently to reconditioning hubs for maintenance and service, and eventually to retail sites for resale.

The result of these trends is a new marketplace where logistics companies can grow their business locally and nationally. Whether for short or long distances, movement of vehicles is now more critical than ever.

Embracing New Technologies to Support Digital

With these opportunities also come new challenges for the logistics industry. Clients are changing the way they do business, and this is no different in the wholesale vehicle marketplace. Even at the physical auctions today, you’ll see buyers and sellers frequently checking their smart-phones, and it’s not just to catch up on their email. They’re checking vehicle information and making transactions.

The major players in the wholesale vehicle marketplace have not only embraced new technology platforms but have come to expect adoption in all parts of the business. Dealers, OEMs, brokers and lenders are looking for new technologies, such as mobile apps, that can connect them to one another directly.

Additionally, those parties are interested in digital solutions that make logistics a seamless part of the broader ecosystem. They don’t want the hassle of navigating different systems for each part of the process. They want to focus on buying and selling vehicles with logistics integrated into the overall process.

For logistics companies, this means building platforms that take advantage of API technology to connect to other platforms in the ecosystem. It also means having more advanced technology built into the pricing equation for logistics. Industry players will increasingly look for new predictive pricing models that fairly reflect the value of transportation needs and help them determine whether its worth buying or selling a vehicle.

Creating a More Efficient Vehicle Marketplace

These changes will not be easy to make. As other industries have shown, the move to digital is not an evolution of business models; it creates entirely new ways of doing business and introduces new competitors. The end result will be a more efficient wholesale marketplace for buyers, sellers and the end-consumer on the retail side. Vehicles will flow more quickly and easily to meet specific demands.

Logistics firms that recognize the seismic shift and make significant changes to infuse digital in their own business will see even more opportunities for their services. They’ll succeed in this new digital business environment by playing a critical role in bringing down barriers and making the overall marketplace more efficient.

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