Firms turn to customers’ needs

The current situation is good, but economic developments must be observed.

More efficient logistics solutions are sought.More efficient logistics solutions are sought. (Source: SME)

MEETING the requirements of customers to the maximum extent possible belongs among the current trends of logistics and transportation companies in Slovakia. Though many of the companies consider their present situation good, they emphasise the importance of changes in the economic situation as logistics firms are among the first to be impacted by them.

The Slovak Spectator spoke with Andrea Ambrogio, managing director of Gefco Slovakia; Dietmar Schmickl, managing director of DB Schenker in Slovakia; Roman Stoličný, managing director of Dachser Slovakia; Ali-Hussein Daher, marketing and products manager of Slovakia Parcel Service; and Zsolt Tóth, managing director of DHL Freight Slovakia about the current situation in transportation and logistics.

TSS: What are the current trends in the logistics and transport services sector?

Andrea Ambrogio (AA): I would use three key words: globalisation, information and optimisation. As for globalisation, manufacturers nowadays focus on cost reduction, R&D and development of new markets, and their supply chains are becoming increasingly global. Worldwide solutions call for a truly global partner, able to cover the whole supply chain, from collecting parts to optimisation of storage and in-plant logistics to delivery of the finished product around the world. Information, as accurate information and efficient IT systems, can significantly save time and money. Optimisation, as it is no longer sufficient to just meet the client’s need – through our engineering solutions we have to be able to anticipate and actively come up with innovative ideas for constant lean improvement.

Dietmar Schmickl (DS): Current trends with an impact on logistics companies operating in Slovakia are in fact nothing new or spectacular. Customers are still looking for support in improvement of their logistics processes, support in streamlining logistics costs by intelligent supply chain solutions, and in analysing volumes of transport and defining centres of gravity, to be able to set up efficient logistics solutions.

Roman Stoličný (RS): Logistics has changed in the past few years. The crisis years have created pressure on costs and increased the demand for logistics outsourcing. Currently, the outsourcing of transportation is nothing extraordinary. Moreover, the trend is to transfer the powers to logistic partners who then enter the planning processes of their customers, and take not only distribution logistics, but also controlling and merchandising. We also see the potential of the procurement logistics outsourcing. The aim of the intelligent outsourcing projects is to improve the whole network of suppliers, not only its individual parts. 

Other changes impacting logistics are changes to global trade. Imports from Asia remain strong, but the import of goods is in most cases conditioned with taking the whole container. This may represent a huge burden for Slovak importers, either from the point of finances or capacity. Also the use of IT systems continues, without which we cannot even imagine modern logistics. 

Ali-Hussein Daher (AD): Based on the significantly growing e-commerce sector, the current trends in logistics and transport services sector are focusing on the consignee (end consumer). Logistics and transport companies are introducing new services in order to offer the end consumer the most flexible and suitable delivery service. 

Zsolt Tóth (ZT): The trend leads to services with added value. The customers expect you to offer them a complete logistics solution. Particularly companies with a corporate background look for partnerships with logistics firms whom they can trust and then they are willing to show them their internal logistics in order to find an effective and quick way from the creation of the product to delivering it to end customers.

TSS: How does the current global economic situation affect the logistics and transport services and their development in Slovakia?

AA: Slovakia is in a very good position. Despite its small size the country is very dynamic and a strong player in the automotive and electronics sectors. With most of the consumption abroad, there is a huge opportunity for service providers to develop their international business and thus the logistics sector in Slovakia can no longer remain local, or regional.

Even though the current economic situation creates pressure on effective use of resources, this should be perceived more as a challenge than a threat. Logistics is about constant adaptation; nowadays, having a fleet of trucks is not enough; logistic providers must have a solid know-how, a dedicated engineering team, a large network, an efficient IT solution and an ability to offer complex multimodal transport solutions anywhere in the world.

DS: The logistics and transport sector in Slovakia is mainly steered by the future development of the main industrial sectors, automotive and electronics, which are dependent on the economic development in all of Europe. Seeing small growth rates within Europe we face a big danger that the transport sector, being one of the first indicators of economic development, will decrease as well.

RS: The economic situation has a direct impact on logistics: the market fluctuations, the drop in demand and the increase in business activities of the individual segments. One of the first to recognise them is a logistics provider. We are glad to see the market restored and the demand increasing, particularly regarding consumer goods. Also, the investments influx to Slovakia, like the construction of the Jaguar Land Rover plant, has a positive impact on the logistics sector. The situation of Slovak exporters is also good this year. 

AD: The Slovak economy is strongly dependent on the European economy, especially on its main trade partner, Germany. Any uncertainty on the global or European level directly impacts the Slovak economy and is transmitted to the logistics and transport services sector. We register a decrease in the volume, switch to cheaper services, consolidation of shipments and price pressure.

ZT: From a global point of view, the development in transport prices impacts the development of fuel prices. In Slovakia, however, the capacity itself, which means the human factor, has a much greater effect on prices. It is not a problem to obtain the trucks, but we lack a generation of professional drivers.

TSS: Which measures adopted either on the Slovak or the European Union level impact the logistics and transport service providers the most, either in a positive or a negative way?

AA: The logistics sector has been, or could have been, largely impacted by the controversial law passed in Germany concerning the minimum hourly wage. Taking into consideration the trade exchange between Germany and Slovakia, even a slight increase of costs caused by adjustment of hourly wage for truck drivers would have a tremendous impact on cost of transport and consequently final prices of goods. In our case, Germany is an important transit country for our flows to France; implementation of such a law would impact multiple contracts. Moreover, such a law is being prepared in France as well.

DS: Increase of administrative burden together with measures directly impacting the cost base in transport and logistics – like minimum wage in Germany or increased toll charges in several European countries – are surely impacting the whole industry in a negative way. Without sustainable profit margins, companies are not able to invest into development, which slows down the logistics and transport industry. 

Economic sanctions between the EU and Russia also create a blockade of trade and in consequence this of course hits the transport industry, especially small companies specialising in the Russian market. For multinational companies it does not represent an existential problem, as they can change their focus based on economic development and perform on other markets.

RS: Logistics in Slovakia has been impacted by incomplete infrastructure. Though much has been done, the completion of the highway connection with eastern Slovakia is still missing. It would also be good for Slovak logistics to support vocational education in logistics. The educational process focused on practice is missing, which results in having graduates into whom also the logistics firms have to invest.

Regarding foreign measures, this year the road freight has been affected by a regulation adopted by Hungary which orders some kinds of goods to register in the Electronic Trade and Transport Control System (EKAER) and to inform about the truck transport which will go to and through Hungary. 

AD: The European Union is strongly focused on consumer protection. With this policy, it puts huge pressure on the e-commerce segment to fulfil the legislative requirements. E-commerce, in order to stay competitive and profitable, must search for cost saving possibilities which are mainly visible in regionalisation, placing one warehouse to cover more than one country, and optimisation of the logistics and transport services by pushing the rates down or offering local postal services.

ZT: Every measure has its positive and negative side. When talking about the regulation of the working hours of drivers, it is a challenge for us to plan the routes while observing all rules, which is a negative, but the safety of drivers is a positive. Moreover, implementing the road tolls or the minimum wage in Germany has an immediate impact on the costs of transport, but on the other hand it secures higher quality of roads and increases the living standard of drivers.

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