Inbound Logistics

Driving Efficiency: How Auto OEMs and Suppliers Can Slash Inbound Logistics Costs and Transit Times

The U.S. automotive industry thrives on a complex web of inbound logistics—the critical flow of parts and materials from suppliers to assembly lines. For original equipment manufacturers (OEMs) and their suppliers, optimizing this intricate process directly impacts profitability and production speed. Amid a torrent of external pressures on profit margins, both OEMs and suppliers have no time to lose in cutting costs and accelerating transit times in inbound logistics.

New option for Midwest cargo

Automakers use air freight in specific situations where speed and efficiency are critical. During new vehicle development, for example, companies frequently use air cargo services to ship prototypes, testing equipment, and experimental parts to testing facilities, auto shows, and research centers. Of late, because of seaport congestion, European, Japanese, and South Korean vehicle manufacturers are moving parts and heavy machinery that would have traditionally been ocean-shipped now travelling via air to meet tight deadlines.

For many years, Chicago was the default air cargo destination for automakers in the Midwest. But O’Hare International Airport has competition. Over the past decade,  Cincinnati/Northern Kentucky International Airport (CVG) has experienced significant growth in its cargo business, becoming one of the largest cargo airports in North America. This success is due to a combination of strategic partnerships, infrastructure development, and its geographic location.

Using CVG as a hub airport makes cost reduction possible, as the airport has lower terminal fees than ORD. The airport is also strategically located within “Auto Alley,” a region densely populated with automotive manufacturing and supplier facilities, which could lower trucking costs. Toyota, Honda, Subaru, Nissan, BMW, Mercedes-Benz, and Volkswagen all have production plants within 500 miles of the airport.

Nissin International Transport U.S.A., for example, has saved customers more than 30% on shipments from Nagoya, Japan, to CVG, compared with cargo shipments from Nagoya to Chicago.

Tackling Hidden Costs & Port Efficiency

Ocean freight remains the prevalent mode of shipping for inbound logistics because it has a much lower sticker price. OEMs have to remain focused on balancing efficiency and resiliency with managing costs.

Beyond direct transportation expenses, OEMs often face hidden costs that quietly erode their budgets. Among the most significant are demurrage and per diem fees. These charges accrue when containers overstay their welcome at ports or when chassis are not returned on time. Such fees frequently stem not from unavoidable delays, but from operational misalignment, port congestion that isn’t adequately accounted for in scheduling, or miscommunication between logistics providers and warehouse teams.

There are logistics strategies to prevent these fees from accumulating and keep freight moving. When port congestion occurs, work with a logistics provider like Nissin that offers rail transfer services. Nissin will pick up containers arriving at the Port of Los Angeles and transport them directly to the rail yard. This reduces the impact of port delays and shortens lead times.

Another effective solution is to take advantage of container freight stations (CFS). A CFS is a warehouse that specializes in the consolidation and deconsolidation of cargo. After a container arrives at the destination port, it will be taken to a CFS for deconsolidation. Less-than-container- load shipments will be picked up from the CFS for final delivery. Nissin, for example, has a CFS in Chicago. The company provides daily shuttle service to Dayton, Ohio, and Indianapolis using its own trucks. The dedicated service improves on-time performance and traceability.

Don’t make the mistake of assuming that every freight forwarding company knows how to manage inbound logistics. For your just-in-time or just-in-sequence deliveries to work, production schedules and freight deliveries must align perfectly, meaning even the slightest delays can bring production to a standstill.

Nissin works with the world’s largest OEMs and suppliers to facilitate air and ocean freight and logistics options to more than 400 global locations. We specialize in shipping vehicles, parts, electric vehicles, batteries, and supplies. We have solved automotive logistics challenges for more than 45 years.