Last week's news that GM is taking a 7% stake in PSA Peugeot-Citroën and will establish "a strategic, commercial cooperation" with PSA's logistics subsidiary means that both carmakers could potentially increase sales opportunities in markets beyond Europe. The new deal also offers Gefco the opportunity to benefit from economies of scale critical to the carmakers just-in-time delivery priorities.
On Wednesday last week, GM and PSA released a joint statement that outlined plans for an alliance based on shared global vehicle platforms and components, as well as the creation of a global purchasing joint venture for the sourcing of those components and other goods and services.
One of those services being logistics, the carmakers now stand to benefit from an increase in logistics services provided by Gefco, which has a global logistics footprint in established European markets as well as a strong showing in the BRIC nations.
They will also benefit from the efficiencies derived from a lower percentage of shipping cost as a proportion of the manufacturing process, including leveraged volumes.
The companies have stated that they are jointly exploring areas for further cooperation, such as integrated logistics and transport, and to this end GM intends to establish relationship with Gefco for the provision of logistics services in Europe and Russia (regions where it already has business contracted with the provider).
While the carmakers remain unwilling to comment more on the specific opportunities for increased efficiency through a shared logistics network, the benefit is that, with Gefco's infrastructure and networks already formed, these can be exploited to GM/PSA advantage and implemented relatively quickly.
According to Frost & Sullivan analysts Martyn Briggs and Pietro Boggia, this depends on the current relationships that GM/PSA have in these regions in terms of logistics, "but a first impression is that this could be a cost effective way of gaining access to these markets," they said
The integration of transport and logistics services is not without its challenges, including the usual cross-border issues, but the key challenge will be managing shipping cost compared to end market positioning.
"As markets start to develop and grow, there becomes a trade off between shipping costs and where it is more efficient to produce the vehicles in that particular region," said Briggs and Boggia.
This could mean consolidation of production and logistics, certainly in Western Europe, to realise the economies of scale that are critical for just-in-time management.
"In general there is overcapacity in the sector in Western Europe and firms are looking at ways to offset that, primarily through alliances. Gefco could be well positioned to take advantage of this trend," said Frost & Sullivan's analysts.
While Gefco also declined to comment at this stage, sources at the company told Automotive Logistics that the provider's management saw the development of both the GM agreement, as well as PSA's intention to sell part of the company, has extremely positive and providing further opportunities for expansion.
The question remains how soon could GM and PSA integrate their global vehicle platforms and components and being to make savings in logistics costs. Considering the integration of Renault and Nissan, it took around a decade before more serious efforts were made to combine logistics and supply chain management operations.
