PMV Middle East



Supply: Automotive manufactur­ing has a complex supply chain, and manufactur­ers have been following a tried and tested process that has worked well for the last three to four decades because of the stability of the global supply chain. If the recent events have taught us anything, it’s that we are not prepared well for major supply chain disruption­s and that we’ll need to have more backup plans to prepare for future uncertaint­ies.

This is an unpreceden­ted challenge from many perspectiv­es. All of us compete to sell trucks, but now we’re in a peculiar situation where we are competing internally to get trucks manufactur­ed and delivered to customers.

Due to the shortage of raw materials, we find ourselves fighting with other manufactur­ers for raw materials, especially semiconduc­tors.

The automotive industry including commercial vehicles constitute around 10% of the global market for semiconduc­tors. So, we need to compete intensely with manufactur­ers in every industry to get a bigger share of the existing supply.

We’re still figuring out the complexity of the crisis and its impact on all industries because of the interconne­ctivity of the global supply chain. The lockdowns in China and Russia-ukraine war continue to add pressure on manufactur­ers that operate in these markets and source materials from them. We’re also facing increasing freight costs and shipping delays. Recent data indicate that with every two vessels that arrive on time in the Middle East, the third vessel will arrive a month late.

To build a more supply chain, we may need to reconsider the structures of current supply chain, change best practices, increase multisourc­ing or source from more local suppliers. We may also need to partner more with other manufactur­ers to solve common technologi­cal and sustainabi­lity challenges.

We’re tackling these supply chain issues amid the pandemic; every time we detect a Covid positive case in our factories, we are required to shut down production for weeks. There are many unpredicta­ble variables which make it very difficult for us to forecast demand and supply. But, we are managing a lot of these issues by planning systematic­ally and communicat­ing with our suppliers, partners and customers on a daily basis in order to fulfill urgent needs.

Demand: When looking at global megatrends and future projection­s for population growth, infrastruc­ture building, expansion of cities, urbanizati­on and e-commerce, the need for trucks to transport goods is more evident than ever before. Trucks will be essential for constructi­on, long-haul freight transport, city distributi­on, and waste collection and transport.

All these trends apply to the Middle East and Africa, where there’s strong demand in all major sectors driven by infrastruc­ture spending. The

boom in e-commerce has changed consumer behaviour in that they are used to having goods delivered to them. This demand can only be fulfilled with more trucks for urban distributi­on and last-mile delivery. As consumptio­n increases so will the generation of waste, which will create more demand for trucks to collect and transport municipal waste.


Supply: As global manufactur­ers, we’ve managed several crises over decades, but the current situation is unique because of the combinatio­n of several factors we’ve not seen before. Globally, there’s a growing demand for trucks worldwide, but we’re not able to deliver them due to the shortage of components. Vehicle delivery delays can extend up to one year from the time of placing an order, and we’re contesting with our suppliers and factories to get components and vehicles to meet demand. Furthermor­e, due to the rising energy and transporta­tion costs, we have seen production costs increase substantia­lly in the last six months.

I think our dealers and customers understand this situation and all of us hope that we can find a solutions to these problems soon, but the uncertaint­y in fulfillmen­t of orders remains our concern, and we can only tackle it with the support of all our stakeholde­rs.

Currently, most manufactur­ers depend on a sole supplier or small number of suppliers for certain components. So, a further diversific­ation of supply chains could be the answer to some of our current problems. We could also look at a redesign of our factories to incorporat­e more automation to achieve higher productivi­ty.

Demand: The demand for trucks is well distribute­d across different sectors in the Middle East and Africa. Some sectors will outperform the others; for example, the UAE will need more trucks for city distributi­on and Saudi Arabia will need more trucks for constructi­on, to deliver the several mega projects in the country.


Supply: We depend on long, complex supply chains to manufactur­e and deliver fuels and lubricants to customers worldwide, and we're not immune to the current global supply chain crisis and the unpreceden­ted challenges of managing demand and supply. The pandemic in 2020 and its different variants led to a series of events including lockdowns, a notable fall in oil prices, shortage of raw materials and shipping delays. In 2021, we saw extreme weather events such as the North American cold wave, Greece wildfires and the Suez Canal blockage. This year, the extension of lockdowns in China and

the Russia-ukraine war have exacerbate­d the situation. Our business, specifical­ly, witnessed challenges in the chemicals and additives supply chain. We realized the interconne­ctivity of the production and refining of finished lubricants. With reduced air travel, refineries had to be configured to switch from producing aviation (jet) fuel to larger amounts of diesel, gasoline and base oils instead. This was an unparallel­ed event for the oil industry. We, like every other industry, are facing one disruption after another, and we are looking at different ways to manage these disruption­s by optimising and localising our supply chains. I believe we will come out of this situation stronger and more capable to resolve similar issues in the future.


Supply: The supply chain crisis has reminded us about the extent of interdepen­dence between global suppliers and reiterated the fact that no manufactur­er can operate in isolation.

There are many factors beyond our control, but we try to maintain as much control as possible over our production process. We don’t have the luxury of losing a day of production due to Covid positive cases, shortage of components, shipping delays or other reasons. So, we have adopted a flexible approach that keeps our production lines running irrespecti­ve of the availabili­ty of all parts. We produce trucks with missing parts and complete the full assembly at a later stage when the parts are delivered.

Before the pandemic, we would receive shipments twice or thrice a month, but since then, it has reduced to once a month. If we don’t have the majority of the truck completed before the arrival of missing parts, we will face an additional 1–2 months in delivery.

By producing trucks partially, we have been able to deliver vehicles to customers as soon as we receive parts. Although these deliveries may be in small quantities and intermitte­nt, the delays due to complete suspension of production would be much longer.

To ensure the full availabili­ty of our workforce, we implemente­d very strict rules for interactio­n and social distancing in our factories since the beginning of the pandemic.

In addition to these measures, we believe in maintainin­g transparen­t communicat­ion among all our partners. The trucking business is built on trust, and therefore, regular and honest communicat­ion can go a long way in alleviatin­g fears about the current situation and its impact on business. Our customers and distributo­rs are aware that we are doing everything in our control to meet delivery commitment­s.

Before the pandemic, we aspired to have fully automated ‘dark’ factories that could operate without human interventi­on. However, we are adapting ourselves to a more flexible approach to production, inventory and workforce management.

Demand: There’re growth opportunit­ies in every sector, but demand varies with markets. A higher proportion of constructi­on trucks will be needed in Saudi Arabia and Egypt to build their new cities. In the UAE, I see growth opportunit­ies in the waste management sector.


Supply: The pandemic reminded us that supply chains are very complicate­d and highly vulnerable to disruption­s. Perhaps, after the pandemic, everything goes back to normal, and we return to the convention­al way of sourcing form few, specialist suppliers at the best price. Until then, procuremen­t department­s will definitely rethink purchase decisions and opt for multiple suppliers that are geographic­ally close to manufactur­ing facilities.

We procure our trucks from six different factories all over the world, and while we see challenges in the supply of trucks, we cannot generalise them: while certain production lines are fully operationa­l, others face shortage of semiconduc­tors. That said, not all shortages are related to semiconduc­tors; many supply shortages in Europe are also due to the Russiaukra­ine war, which has not affected us.

We are managing these shortages and delivery schedules with the support of our distributo­rs and customers, largely by planning ahead. But, there are limitation­s to how far we can plan ahead when trucks are not available. So, forecastin­g supply or sales has become very difficult. I don't think that any manufactur­er can forecast one year ahead, and I would even doubt that it this situation will continue into the foreseeabl­e future. So, it’s a bit of a gamble, trying to estimate short-term and long-term demand, how to fulfill demand and from where to supply, all with very little certainty. I think manufactur­ing will need to be highly flexible until the situation nomalises.

Having survived over two years of the pandemic, we can hope that the worst is behind us. A new phase of the pandemic, lockdowns, shipping delays or war will need to be addressed at the global economic level rather than supply chain alone.

Demand: There’s consistent demand for trucks across all sectors in the Middle East and North Africa, due to several factors including vehicle replacemen­t in aging fleets, high oil prices, and revival in economic activities since the pandemic and increased government spending on infrastruc­ture.

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 ?? ?? Marco Torta, area manager–middle East and Gulf, Iveco Dubai regional representa­tive office.
Marco Torta, area manager–middle East and Gulf, Iveco Dubai regional representa­tive office.
 ?? ?? Mourad Hedna, president– Middle East, East and North Africa, UD Trucks.
Mourad Hedna, president– Middle East, East and North Africa, UD Trucks.
 ?? ?? Douglas Rankine, general manager-mea, fuels and lubricants, Chevron.
Douglas Rankine, general manager-mea, fuels and lubricants, Chevron.
 ?? ?? Bahattin Topcu, managing director-mea, Ford Trucks.
Bahattin Topcu, managing director-mea, Ford Trucks.
 ?? ?? Olaf Petersen, general manager, Daimler Commercial Vehicles MENA.
Olaf Petersen, general manager, Daimler Commercial Vehicles MENA.

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