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Domestic firms struggling to deliver in Slovakia

In Slovakia shipping and transport has taken off in the last decade, with local shippers opening businesses aimed not only at serving the domestic market, but also looking to tackle head-on the large international firms that have moved onto the market.
However, on top of having to compete with some of the largest players on the global market, many small local businesses have also had to absorb recent price hikes for fuel, electricity and rents for office space, increases that have endangered their very existence.
"According to an analysis carried out by MESA 10 [a Bratislava-based economic think-tank] this year, the increase in prices amounts to some 30% compared to last year," said František Pinte, general director of the NAD 820 shipping and transport company.


Shippers say that delays at the border are hampering their efforts to deliver important parcels on time.
photo: TASR

In Slovakia shipping and transport has taken off in the last decade, with local shippers opening businesses aimed not only at serving the domestic market, but also looking to tackle head-on the large international firms that have moved onto the market.

However, on top of having to compete with some of the largest players on the global market, many small local businesses have also had to absorb recent price hikes for fuel, electricity and rents for office space, increases that have endangered their very existence.

"According to an analysis carried out by MESA 10 [a Bratislava-based economic think-tank] this year, the increase in prices amounts to some 30% compared to last year," said František Pinte, general director of the NAD 820 shipping and transport company.

"We haven't been forced to reduce our manpower, but life is more complicated than it was a year ago," said Pinte.

He explained that the current financial situation was one of the biggest problems that his company had to tackle. "We are agitated by the payment discipline of our customers. If they don't pay us we are not able to pay our suppliers, and unfortunately this phenomenon is very common in modern-day Slovakia," he said.

Shipping companies are agreed on the fact that the financial situation has worsened and caused many businesses to close down. "The payments and fees for single or multiple entries for carriers into western European countries has increased almost by one third and for many small businessmen the situation becomes financially unbearable. It is not uncommon to see them close down. They are not able to make their living anymore," Pinte said.

Roman Besedič, station manager of the FedEx Inspekta Slovakia company, added that it was not only the highway payments but also "fuel, rent for office space, water, electricity, which went up and influenced the financial stability of many smaller businesses." Besedič's firm has been offering air courier services to Slovak customers since 1994.

As the shippers fight against the undisciplined customers who push them into a circle of debt as well as the spiralling costs of business, company heads are considering launching an association to help them solve these problems more efficiently.

"So far, shippers have not had any association in Slovakia which would represent their interests more directly. But I have heard this should change in the near future," Besedič said.

He said that an association of international couriers in Slovakia was expected to be formed this year, but could not provide any further details about the plan.

One of the main complaints of the shipping companies is the red tape that often hinders their day-to-day activities. The shippers are hoping that the birth of the association can begin to put an end to this.

"Our biggest problems are with the bureaucratic procedures which influence the quality of our services. We would love to see some changes in the legislation concerning time-consuming procedures at the Slovak border, and I believe that the association could be an effective device for making these changes happen fast," said Besedič.

Since its formation in 1986, DHL's Slovak branch has become the biggest express courier company in Slovakia, currently holding a 40% share of the domestic market. Silvia Silverberg, DHL Slovakia's commercial representative, agreed that legislation compatible with European standards would help the local courier business.

"The creation of an association of courier express companies would move the necessary legislative changes forward," said Silverberg, but refused to specify what particular changes her company saw as most important to be pushed forward in the legislation.

While all shippers are struggling to keep their hard-won customers, the influx of big international companies has made life harder especially for small local entrepreneurs. International giants such as DHL and UPS set up branches in Slovakia over 10 years ago with their own ambitions to do business on Slovak territory and offer better services than had been provided before 1989.

"These international giants have a well functioning net around the world and a long[er] tradition [in the industry]. It is hard to compete with them. Even the companies from the Czech Republic are pushing the prices of customer services down," said Pinte of NAD 820.

According to figures from the SITA news agency published on February 7, DHL International Slovakia's 40% market share was followed by FedEx Inspekta Slovakia (Slovak agent of the US Federal Express based in Memphis, Tennessee) which holds 19%, UPS with 13% and TNT Worldwide with 11%.

However, despite being competitors on the market, Pinte and Silverberg agreed that more foreign investment would help make their lives easier. "We believe that the Slovak economy will improve substantially when more foreign investment enters the market. However, this very much depends on political stability," said Silverberg.

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