All market players are seeing an increase in the cost of doing business. This includes the retail sector, which often uses various types of transport and distant sources of supply, e.g. Asia. In the area of maritime transport, the biggest spike in costs is behind us. We are currently observing stabilisation with minimal downward fluctuations. It is difficult to forecast anything, but at the moment we do not expect any significant upward or downward movements. Over the next year, we anticipate maintaining the prices level in this segment. Rail and long-haul air transport prices are strongly linked to sea transport. However, neither of these will replace the maritime transport, which handles the absolute majority of volumes. Higher prices are also expected in the contract logistics market, where drastic changes in utility prices (reaching several dozen percent) are planned in the coming months. Rising labour costs of 10% y/y translate into higher costs both in warehouses and on roads. In 2020, due to downtime in supply chains due to COVID-19 (especially in Germany - at our largest trading partner), a temporary reduction in volumes in international transport was visible, which caused a temporary shift of the activities of some Polish carriers to the country. However, since the beginning of this year, we have seen an increase in European flows, which has triggered another wave of cost pressure in domestic transport.
The sea freight market remains a challenge, especially in the face of the global container crisis. Now the transport of the container by sea from FAE to Europe takes not just over 30, but even 60 days, mainly due to port congestions and lack of equipment. There is no less vessels, but we are temporarily waiting for the delivery of the next new units, while global demand continues to grow. Especially big congestion is observed in USA ports where older infrastructure is not adopted to handle so quickly rising volumes. It is difficult, but our priority is that our customers do not experience problems in the supply chains. Despite of the container price increases and the limited space on the vessels, we are successfully supporting our customers, which is also evidenced by our double-digit growth in this area.
The staffing situation on the market does not inspire optimism either. Currently, there is a shortage of more than 100 000 drivers on the Polish market. Employees prefer stationary work and it is becoming increasingly difficult to attract them to work as, for example, a driver. I expect more and more to be missing. That is why we are working on solutions that are designed to convince young people to work in logistics, and in particular in transport. This will surely be one of the key challenges for the entire sector in the coming years. From March to August 2021, after the "rebound" of international volumes, we saw an outflow of drivers for international sections. Admittedly, the situation has now stabilized, however, we still have to face the issues of changes related to the Mobility Package and national regulations concerning, inter alia, delegation. Currently, we do not know what the final changes will look like. It is estimated that the cost of employing a driver may be 20-30% higher (2022 vs 2021, taking into account the impact of legislative changes). The superimposition of rising fuel prices and the unavailability of the fleet shows an increase in the prices of all cost factors.
The COVID-19 pandemic has been a catalyst for change and an accelerator of digital transformation, so that today we are seeing the acceleration of the digitalisation of every area of life. The restrictions related to COVID-19 increased the penetration of active e-commerce users. Many companies have invested in new technologies, starting to sell online and seeing many benefits and opportunities for growth. If anyone used to not shop online, they have more than likely to do so in the last two years. The entire e-commerce channel is growing by double digits and this trend will stay with us for sure in the coming years. Another global trend was caused by limitations in sea transport and turmoil in the raw materials market - the need to diversify sources of supply. In light of these risks, European producers more and more often plan to transfer production and sources of supply also to the old continent.
All such digital changes should ultimately serve to improve customer satisfaction. And they always want their service to be delivered faster and cheaper, which is more and more difficult to achieve nowadays. In the area of FTL (Full Truck Load) transport, the main expectations are low prices, but also cargo safety. However, in the case of last mile deliveries (groupage), where we carry out both B2B (to business) and B2C (to the final consumer) deliveries, a number of new requirements appear. Transport ordering parties more and more often expect a comprehensive service covering not only delivery to their contractors, but also direct to consumer deliveries (DTC). We estimate that 20-30% of the e-commerce market is the delivery of pallet goods that do not fit into the standard parcels (of the courier market). In this area, not only transport service is needed, because e-customers, as very demanding consumers, pay attention (apart from fast and timely delivery of the shipment) also to the entire order fulfillment process. They often expect additional services, e.g. bringing the purchased goods, installation, assembly, disposal of packaging, collection of used equipment. Such a phenomenon also affects the difficulty in obtaining drivers ready to provide this type of additional services. We see that customers see problems in the market more and more often and therefore decide to opt for higher quality service at higher rates. This is mainly due to the fact that in direct delivery services to the consumer - the level of service and the safety of goods are crucial.
The e-commerce and pallet delivery segment is very important to us. We work with clients in the furniture and household goods industry, among others, and we see that consumer expectations are constantly rising and online stores are facing new challenges in terms of delivery. Some companies in this segment, focusing on comprehensive services, achieve a competitive advantage. We want to support such companies, which is why we offer a comprehensive service of order preparation, delivery, delivery and on site services. This requires a dedicated team to handle this area, as not only their share of the total number of deliveries, but also the entire segment continues to grow in double-digit pace. One of the key projects we are currently running is a pilot of cooperation with one of the biggest e-commerce platform - Allegro. We know that the satisfaction of our client’s customers guarantees successful cooperation. Therefore, the strategic area of development for us is to ensure the security of continuity in the supply chain. Based on the comprehensiveness of our offer (and we are able to handle the entire supply chain as well as customs, advisory, VAS, etc.), we focus on supporting our clients in maximizing their clients' satisfaction.
Adam Galek
Member of the Board
Rohlig Suus Logistics
Andrzej Kozłowski
Member of the Board
Rohlig Suus Logistics
