How Maersk is using smarter solutions to power the global Electric Vehicle battery supply chain.
LG Energy Solutions is a subsidiary of LG Corp, specialising in the manufacture and supply of EV (Electric Vehicle) and ESS (Energy Storage System) batteries. They currently operate factories in China, Poland, the United States and South Korea, producing and delivering EV and ESS batteries to the vehicle manufacturers.
Electric Vehicle batteries are, by nature, a valuable commodity in very high demand. They are also extremely sensitive to temperature and humidity, and need to be transported in reefer containers, to maintain a controlled environment for the cargo.
The company’s global network of manufacturing units, coupled with the sensitive nature of the product, meant that they faced considerable complexity in their supply chain management processes.
LG Energy Solutions regularly transports materials between each of their 4 factories, depending on the requirements in each region. These are all shipped in reefer containers across a global, cross-functional supply chain. Until Q4 of 2020, the battery manufactured at LG’s unit in Poland was mainly for the European market, with materials frequently being imported from far-east Asia. However, in September 2020, there was a new opportunity to start exporting batteries from Poland to an EV manufacturing plant in Mexico.
This new export journey required reefer containers, which are traditionally in short supply in Europe. While reefers were being used for the transport of materials from the discharging port in Koper, Slovenia to the LG factory in Poland, the containers had to be returned to the dock. This was resulting in frequent reefer shortages for the first leg of the export journey to Mexico, which begins from the loading port in Bremerhaven, Germany.
Moreover, the pre-trip inspection (PTI) for the reefer containers took more than 1 day. This process was causing a delay in the departure of the cargo from Poland, resulting in complications in the overall export journey due to the critical just-in-time requirements of the automotive industry.
The main issues facing LG Energy Solutions were a lack of reefer container availability and further delays due to the PTI process.
Our team proposed a customised depot solution, which would help resolve issues with both time as well as equipment shortage. LG Energy Solutions was already a Maersk customer, using our AE-19 intercontinental rail service and our ocean services to transport materials from Asia to Europe, and so the new depot could be seamlessly integrated with the existing supply chain.
The new depot in Katy – just 15.7km from the LG factory in Wroclawskie – allows for direct deliveries and shorter transit times. The container availability problem was also resolved by replacing the Transloading service from Slovenia to Poland with Inland Container Delivery . Now, when materials land in Koper from far-east Asia, those same reefers are immediately forwarded to the depot in Poland, where after unloading, cleaning and inspection, they can be reused for the export of the new batteries.
Through our RCM solution Captain Peter, the customer was also able to keep a real-time check on the temperature and humidity levels in the reefers, thus improving quality control, and strengthening their global SCM system.
By establishing the new depot, Maersk was able to provide LG Energy Solutions with numerous benefits to help strengthen their entire supply chain. The company now has high visibility on its equipment supply, enabling greater end-to-end control, and more streamlined management of the entire system.
PTI times have reduced by almost 80%, making it quicker to initiate the export process. This also helps LG to release empty reefer containers in a more timely and efficient manner, ensuring there is no repeated shortage, even in a traditionally reefer-deficit region.
Thanks to Maersk’s expertise and customer-centric mind, we were able to solve one of the main areas of concerns in our EV battery supply chain.
Our next step is to help LG further consolidate their supply chain. We’re working on a rail solution from Katy to Bremerhaven, to help speed up the reefer transfer. And we’re also looking to strengthen their inland facilities by implementing a container delivery service from Koper to Katy.
Helping build a more sustainable future
With the planet moving towards greener initiatives, the Electric Vehicle market is expected to grow annually by around 20% over the next decade. Through our integrated logistics solutions at Maersk, we want to help manufacturers meet this demand, while simultaneously fulfilling our shared vision for a more sustainable future.
To learn more, contact your Maersk sales representative or reach out to us directly at APACmarketing@maersk.com.