Service Providers Harnessing the Sun

Still young solar companies need flexible logistics people with international know-how.

By Claudius Semmann
Germany's solar industry is currently producing at its limit. Delivery bottlenecks as well as tight freight capacities have brought the supply chain management more into the focus of attention. With benefits as well as drawbacks for service providers. The still young industry continues to have great outsourcing potentials. But the pressure on prices for transport and logistics services has greatly increased.

"Challenges for logistics service providers are essentially the great flexibility with regard to controllable volumes and growth as well as the international setup of solar companies", says Jens Hornstein, solar expert at Kerkhoff Consulting. Moreover, the entire supply chain requires precisely timed deliveries – from glass suppliers in production all the way to conveyor line assembly at the construction site. According to Hornstein, the degree of logistics outsourcing in the industry is higher than, for instance, in the electrical industry or in the mechanical engineering industry. "Solar companies have a more modern structure. They want to invest capital as productively as possible, which means investing in R&D and manufacturing instead of in warehousing and logistics."

Difficult fall-season months
Gunnar Mickeleit-Jung, Key Account Manager of the Berlin-based Rieck Logistics Group, also confirms that the logistics area still has consulting demand. The solar industry is producing at a very high level, and capacities had been considerably stepped up in the past two years. Actually, freight volumes could still be handled nearly 100 percent. But the manager expects "serious consequences" for the fall months. Because according to all forecasts demand will remain unbroken until year's end. "Throughput times and due dates will certainly be set tighter. Difficulties can occur especially due to the lack of freight capacity for specific routes, or storage areas", he tells DVZ.

On the one hand, higher inventories must be built up for a short period of time to maintain supplies and supply capabilities. And on the other hand, seasonal fluctuations in sales must be balanced out. "Frequently, there are no or insufficient capacities so that we are in demand as service providers ", says Mickeleit-Jung. Chances are thus good to conclude logistics contracts. "But it's also palpable that, in the future, companies will invest in building up their own logistics facilities and that they are closely checking out operator models."

Logistics costs increased
Due to the economic crisis, it was very difficult for the solar industry to obtain freight capacities. "Accordingly, they also had many shipments air-freighted to be able to perform on their contracts", reports Joachim Marxer who, at Schenker AG, heads the team for the Semicon/Solar division. And since many requirements can be exclusively procured on a global level, no company can get around global sourcing. Thus, logistics costs significantly increased for some. Also for the Finns who were nonetheless able to import their goods on time by ocean freight – like Phoenix Solar AG. The manufacturer from Sulzemoos – sixth in the worldwide ranking list "Photovoltaics Sustainable Growth Index" by the consultancy PRTM – obtains a large part of its modules from Asia. "Due to tight capacities, container rates nearly tripled in one and a half years", reports the head of the logistics team, Hilko Mellenthin. Price pressures intensified at the same time: Prices for solar modules were cut by about half. Since these developments, logistics in the solar industry gained very much in importance, says Mellenthin.

In distribution, the manufacturer collaborates, country-specifically, with one steady logistics services provider. "But we maintain our flexibility to fall back on two, three other service providers which can compensate for capacity bottlenecks."

Tougher price negotiations
While supply chain functions have so far been rather neglected, shippers are also tightening cost screws in logistics. Moreover, the solar industry depends on subsidy programs in the corresponding sales markets. Any reductions in this respect will result in decreasing margins "which is why considerable pressure is applied on the prices for transport and logistics services", advises the logistics company Dachser. "Customers have meanwhile become tougher in price negotiations", underlines the logistician Marxer at Schenker. However, a reasonable price would still be paid for quality, he said. Thus, DB Schenker Logistics had managed to make gains in the 2009 market despite the economic crisis.
Marxer estimates that there is great outsourcing potential beyond transport functions. He mentions in this respect services like maintenance, spare parts logistics, quality control and production supply. For 2010, Marxer continues to be optimistic in terms of growth. Due to the market saturation in Germany, demand would have to be expected to decline in the near future. "However, there are still many other markets worldwide which have huge potentials."