CHALLENGES FACING THE BATTERY LOGISTICS INDUSTRY - PART TWO
Challenges Facing the Battery Logistics Industry - Part Two
It is now widely accepted that the electrification of transportation will require transformational alterations in the supply chains for original equipment manufacturers (OEM).
In the first part of this article, we explored the background of EV Batteries and some of the most important considerations of the logistics industry. In this section, we look at seven of the most important challenges and examine the opportunities for the electric vehicle battery supply chain.
The Specific Challenges
1. Rapid Market Growth
EV Vehicles sales are growing faster than originally expected and the demand for EV batteries is growing almost exponentially, in part driven by a rapid post-Covid recovery period specifically for electric vehicles. There is now growing concern that production requirements could outstrip cohesive logistics supply. To meet this demand manufacturers are planning to build many more production centres.
According to Automotive Logistics 2021, there are over 100 gigafactories in the pipeline and Clean Technica has highlighted that as of May 2021, there were 38 battery gigafactories being built or planned specifically in Europe and the UK. According to BMI, [Benchmark Mineral intelligence] Logistics organisations need to ask themselves if they are prepared for this change?
2 More Key Players
There is an ever-increasing number of players in the supply chain from raw materials suppliers to end-of-life processing. This will require expanded resources to identify, manage and provide more widespread services to the standards as both required by law and desired by a commitment to customer service.
Logistics organisations will also need to put systems into place that can integrate with other supply networks. While it would be ideal for a single company to be able to provide the shipping service from cradle (raw materials) to the grave (battery disposal) it is likely that OEMs and EV battery manufacturers will want to use several unrelated companies in the process. This could be particularly true for last-mile deliveries and reclamation. The well-established Logistic organisations will need to take the lead and ensure that a holistic approach to delivery and collection solutions is achievable.
3. Integration of Supply Chains – Thermic and Electric
In some instances it would be an ideal situation where logistics organisations could create completely separate supply chains for traditional car components and for electric vehicle batteries. This may be possible for larger organisations and specifically for the centralised structure, but the reality is that companies will need to establish long-term migration plans based on the integration of services.
Industry regulations are likely to have a critical impact on the way in which EV batteries are transported across multi-modal systems. Standardisation of industry transportation at a practical (grassroots) level will be essential for safety and efficiency. This concept can be expanded to cover racking and lashing systems, temperature monitoring, safety compliance and many other aspects that will rely on mutual cooperation and agreement. The more complex the EV battery journey the more important it will be to ensure that systems have been designed to accommodate multiple modes of transport. Recent advances in China by the NIO company has now seen the introduction of rapid EV battery exchange systems with specialised recharging systems.
Most importantly, the logistics companies that will win the business are those that can rapidly adapt to differing EV battery requirements. At the moment most batteries transported are those made from Lithium and cobalt. The industry is well acquainted with the issues these cargos present. However, changing sizes, changing components and new technologies in general could quickly disrupt the traditional assumptions.
New EV batteries may well be classed as safer than those currently on the market and may not need the same management standards. At what point do Logistics companies only ship the safer and therefore more cost-effective products? Will there be lucrative markets if shipping units can be designed to be appropriate for all options? This is an area that needs careful monitoring.
Anticipating the transportation needs of the next generation of batteries could easily provide a competitive advantage. Currently Tesla Research is working to develop batteries based on Lithium Iron not Lithium Ion and the complete removal of cobalt from the formula. Will these batteries bring a new set of challenges for transportation or will they make the process simpler and negate the need for extensive investment in safety monitory equipment? The Logistics companies that successfully predict these outcomes will be at a distinct advantage both in terms of marketing and financial management.
4. Safety and Cradle to Grave Responsibility
One of the biggest challenges facing the transportation of EV batteries in 2021 is the perception of safety. There is clearly an opinion that EV batteries are highly dangerous which is not true. Certainly, they are classed as hazardous but so are many other materials and products transported by logistics companies. The concern stems back to 2011 when the crash test of a Chevy Volt caused a fire. Later in 2013 the 727 Dreamliner aircraft fleet was grounded due to thermal runaway. Since then there has been the perception that EV batteries based on Lithium Ion are more dangerous than they are if managed correctly.
The logistics industry needs to help address the safety issue by addressing two somewhat separate points. Firstly, the public and industry need reassurance that that lithium battery technology is safer than they believe and, secondly, the logistics industry needs to ensure advanced monitoring to ensure that this remains so.
Since 2011 there have been extensive advances in battery safety technology including smart packaging, cryo-containment, and non-flammable electrolytes. For example, Mercedes-Benz announced in February of 2020 that a partnership with the Canadian utility Hydro-Québec could well result in next-generation lithium batteries that use a non-flammable solid-state electrolyte. As recently as September 2021, Reuters reported that advances in solid-state EV batteries should now be considered game changing. EV battery manufacturers clearly recognise the importance, and many are already investing extensively in research and development.
However, until the day that EV batteries are classed as non-hazardous to transport, the challenge faced by the logistics industry is to ensure that they are shipped and reclaimed safely. This will, for immediate future, focus on smart packaging, minimising storage and transportation times, temperature control, container resilience and, most importantly, staying up to date with the latest advances in technology. The U.S. Department of Energy Office of Scientific and Technical Information focuses on the three types of safety relating to EV Batteries:
A. Thermal (includes thermal stability, simulated fuel fire, elevated temperature storage, rapid charge/discharge, and thermal shock cycling)
B. Electrical (includes overcharge/overvoltage, short circuit, over discharge /voltage reversal, and partial short circuit)
C. Mechanical (includes controlled crush, penetration, drop, immersion, roll-over simulation, vibration, and mechanical shock)
Mitigating these risks are the combined responsibility of all organisations involved in the manufacturing and transportation of EV Batteries.
5. EV Battery Disposal & Recycling
The collection and disposal of EV batteries, especially those damaged by collisions, will continue to be carried out by specialist businesses. While these organisations are largely labelled as reclamation companies, they too have a significant role to play in the (reverse) Logistics chain. Again, the challenge will be to ensure integration, technology transfer and safety practices. Battery reclamation and recycling is expected to significantly increase in demand as batteries from the first and second generations of EV’s reach their end of life. The IEA recently noted that the EU and China have made positive advances in making battery manufacturers accountable for end-of-use treatment.
While companies such as DHL will focus on moving cells and batteries from the manufacturer to the OEM and aftermarket flows, it is critical to see the larger requirements and ensure a seamless process. The failure of any part of the chain, be it primary delivery or reclamation, will have an impact on the rest of the network.
Sharing technology and information, together with standardised processes, will improve safety and reduce costs. This will ultimately reduce the costs of EV batteries and thus electric vehicles as a group. Worth noting is that as prices fall so adoption will increase and the cycle will need to repeat until the majority of the automotive logistics industry is based on electric.
6. Transporting EV Batteries by Air
As early as 2013 DHL had started working with safety organisations to investigate the challenges surrounding the transportation of EV Batteries by air. Fathi Tlatli, President Global Sector Auto-Mobility at DHL Customer Solutions & Innovation pointed out the issues to Automotive News by noting that not only are they heavy, they are also are classified as "dangerous goods" when flown, and used battery packs can't be flown by air at all. The reason is that lithium can be highly flammable. Given the weight of EV batteries it is unlikely that mass air transportation will be a cost-effective option for some time. However, the industry still has a responsibility to investigate and improve the options offered by air cargo whether on commercial aircraft or on cargo-only planes. As EV batteries become safer and lighter it will be essential to revisit the regulations to ensure that historic rules put in place for one set of conditions should not unnecessarily restrict future transportation opportunities.
7. Real-time Monitoring
One of the significant advances in automotive technology has been the ability of a vehicle to monitor the driver and, if required, take action to ensure the safety of the driver and others. The next stage will be the ever-improving monitoring of EV battery health with extensive early warning systems to prevent thermal-runaway instances, which occur with little or no warning. The same is true for all lithium-Ion batteries in transit.
EV batteries can already be loaded in advanced thermally lined containers with temperature reducing properties and impact resistant features. These systems can also track the location of the battery through the use of GPS. In the future it is expected that central control rooms will even be able to alert transportation units and, if required, even activate fire suppression systems. The challenge will be to ensure that these systems are also suitable for the next generation of batteries that may have a completely new set of transportation challenges.
Logistics companies must anticipate requirements by staying focused on emerging technologies and constantly adapting their monitoring infrastructure.
8. Practical Challenges and Goals
While most of this article focuses on some critical issues and explores these in detail, the logistics industry will continue to face a range of day-to-day challenges that will need innovation to solve. At a very practical level, logistics organisations need to continue to focus on developments that will:
- Simplify customer experience, improve safety and better communicate advances in EV battery safety.
- Reduce (transportation) costs.
- Integrate all parts of the supply chain.
- Accelerate preparation for rapidly increasing demand.
- Be at the forefront of technological change to be ready in advance.
- Modular design systems that can expand and contract so as to be able to fill unexpected demand.
- Develop predictive demand models and algorithms linked to transport nets.
- Accept that logistics companies will become an essential part of national and global (security) infrastructure (in the same way that fuel companies are now).
As with all industries and businesses, there is often the desire to develop a solution that never needs updating. The cost and practical benefits are obvious. However, this is exactly the wrong approach when working with sectors that are inherently disruptive such as EV battery logistics. Logistics companies should consider implementing modular solutions over time, rather than investing in systems with high upfront investment costs that may change as regulations evolve.
Perhaps the most important challenge faced by the logistics sector to recognise the need be flexible in their approach and that anticipating a challenge before it needs a solution. This approach will not only drive the success of the company but will encourage the adoption of electric vehicles and deliver all the environmental benefits needed by modern societies.