Driver squeeze and higher prices cause haulier to optimise its network, operations, IT and recruitment − including sourcing from Serbia and Ukraine.
One of Europe’s leading full truckload (FTL) operators, Waberer’s International, said it has started to “adapt its operational model” in response to a changing market environment in which the industry is battling higher operating costs and severe driver shortages.
A difficult third quarter (Q3) of the year for the Budapest-based firm, which operates a fleet of more than 4,400 trucks, saw its underlying EBIT pre-tax operating profit reduced to €0.5 million on flat global revenue of €182.6 million.
“Market dynamics (in the three months to September 30) had an unusually unfavourable impact on our financials”, explained CEO, Ferenc Lajkó. “As in previous quarters, both of our key segments − international transportation and contract logistics − continued to be characterised by a double-digit year-on-year rise in fuel prices coupled with a tight labour market, putting pressure on margins.
“In this environment, our strategy has been to compensate the squeeze in margins by raising prices, but this was met with adverse volume effects in the summer months when capacities were abundant.”
Lajkó underlined that the transport market had “not yet fully priced in the increased fuel costs and tight driver capacity for the past half year” and that Waberer’s had taken a number of initiatives to counter this in its operations – including better management of its fleet using improved IT solutions. “Downtimes are set to decrease as the efficiency of trailer swaps is to improve and waiting times and standby times are planned to be better optimised for by our order matching (search) engines,” he noted. Driver shortage issues are addressed by sourcing drivers from new labour markets including Serbia and Ukraine.”
Nevertheless, Waberer’s is expecting operating profitability for the full year to be 15-20% lower than in 2017.
Lajkó concluded: “The company has started to adapt its operational model to the changing market environment by implementing additional immediate measures including cost reduction, network optimisation, operational efficiency improvement, and the upgrade of key IT systems.”
Earlier this month Sebastiaan Scholte, CEO of road freight specialist Jan de Rijk Logistics, highlighted toLloyd’s Loading List how European hauliers were continuing to feel the pressure of driver shortages and rising costs, although increases in road freight rates this year have provided some relief to their bottom line, albeit marginally. Earlier this year, Scholte had reported that recruitment had become “a big struggle”; and several months on, he says the situation has “changed a little bit for the better, although that’s not to say we can find drivers and capacity readily everywhere. It’s still difficult and not like where we where with the labour pool two years ago.”
He said Jan de Rijk had put a lot of effort into an “aggressive recruitment campaign, including TV ads in several European countries, which has paid off”. The company has also proposed attractive employment packages to woo new drivers, including helping with accommodation close to the company’s HQ in the Netherlands.
Jan de Rijk has also benefited from a number of drivers, especially young ones, who have quit the profession only to return after realising that “the grass isn’t always greener elsewhere”. Incentives have been offered to existing staff in order to keep them. He believes that in Europe, the impact of the labour shortfall had perhaps been less severe than it currently is in the US, as a result of some of the heat going out of the European market, he noted.
“There continues to be strong demand for road haulage, but it’s less intense than last year when the driver and capacity squeeze was aggravated by the surge in air cargo during the during the Q4 peak season”.
Driver shortages aside, rising costs, due principally to fuel hikes and wage increases, continue to weigh on hauliers’ operating margins, so the upward trend in rates in recent months − which Scholte estimates at 5-10% or more − has been a welcome development, although he says “we are simply recovering costs, nothing more than that. And when you consider that we’re facing even higher costs next year, with new collective wage agreements in the pipeline, the net result will probably be negligible.”
Scholte says a number of haulage firms are battling for survival, noting that it is “incredible that this should be happening when market conditions are good and demand is strong”.
Source: Lloyd’s
