In most parts of Europe, there are many different types of road feeder services. They differ in products, service, networks and reliability. Problems can occur when failures in communication interrupt traffic flows. For example, a recent incident occurred when a shipment dispatched by a shipper located in Germany booked on a certain flight bound for China was eagerly expected to arrive by road. Since time was running out the local handling agent called the shipper asking for the whereabouts of the goods and was told that the truck was still parked near the warehouse in which the shipment was stored. The Slovenian drivers, not speaking any German or English, sat in their cab waiting for some warehouse personnel to inform them when the loading of the items could begin. The Frankfurt handling agent was informed but the shipment missed its flight. This is an example of the pitfalls that can occur when seeking the lowest price, usually offered by trucking companies that would otherwise return home empty, instead charging rockbottom prices if the destination is on route.
A better and more promising solution is to rely on trucking firms that might charge a bit more but are specialized in air cargo and deliver good and constant quality and communicate proactively. ‘When choosing our trucking partners we always ranked the quality aspect first. This fundamental decision paid off up to now and is also welcomed by most clients when thoroughly explained to them,’ states Kales Manager Paul Bodde. On average, the GSSA fills 10 trucks each week with goods to be transported from Germany to Heathrow. ‘However, there are some weeks the number of trucks we need to carry our air freight exports to the UK goes up to 20,’ he says.
The specialized RFS carriers have invested in training, sophisticated IT solutions, GPS tracking, safety and security and reliability. Sometimes the expression ‘penny wise and pound foolish’ is very applicable in this business.
In contrast to BTW that accepts only full truckload assignments, Hamburgheadquartered Sovereign Speed takes any order from clients, irrespective of size or weight. This less than trailer load (LTL) business
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model is highly attractive for many forwarders or handling agents, because it assures them utmost flexibility at all times. Shipments collected late afternoon or early evening all over Central Europe are consolidated around midnight at Cologne or Frankfurt and then handed to the airlines or their agents at London Heathrow or Paris CDG early next morning. This service has become extremely attractive for many industrial players as it bypasses night flight bans in hubs such as Frankfurt, since the only option to get air freight overnight from RhineMain airport to Amsterdam, Vienna or London is by using hauliers.
Founded in 1998, Sovereign Speed is still a fairly young enterprise that keeps spreading its wings. Meanwhile, the service firm’s sprinter fleet and trucks are a common sight on autobahns and highways, especially at night when Sovereign's transport is at its peak. ‘We figured out that there is sufficient demand for fast and reliable transport of express shipments throughout Europe each night and that surface haulage would be the most suitable, flexible and also promising solution to offer the market,’ says ElSayegh. As of today, his firm operates a fleet of more than 120 GPS
equipped vehicles, predominantly trucks but also 30 sprinters.
The company’s main routes are those that link Europe’s major cargo gateways – Frankfurt, Paris CDG, Brussels, Heathrow or Amsterdam, acting as a cargo airline on wheels, ensuring extremely fast transport solutions for shipments from one kilogram to large loads, as well as fixed departure and arrival times. All transport routes are carried out according to a fixed schedule.
They are operated six nights per week to over 55 destinations all across Central and Western Europe. At each major gateway Sovereign has established its own offices, for instance in AMS, LHR, CDG, BRU, CGN, FRA and MUC, to ensure proper handling and operations according to customers’
demands. Sovereign’s business strategy is based on three pillars:
1 The constant increase of the average load factor on all existing routes, to steadily increase the firm’s profitability.
2 Integrating at least two new stations each consecutive year to the network, to increase local commercial activities, widen the reach, and gain additional market knowledge.
3 Adding new products to the existing portfolio, such as different doortodoor services, Customs clearance of shipments, transport of dangerous goods or Xray security controls.
The company operates as a neutral and independent cargo carrier collabo
rating only with forwarding agents, integrators, GSAs and cargo airlines.
A somewhat different business model providing everything from a single source and built on modular solutions is offered by Dutch transporting giant Jan de Rijk Logistics. The company stands for those kind of market players that provide abundant capacity, offer their clients panEuropean scheduled services and have representation or own offices at most major airports within the EU. Addressing a broad range of sectors, market leader Jan de Rijk has built up particular expertise in key industries such as air freight, automotive, aerospace, hightech and electronics, retail, healthcare and perishables.
In addition to RFS, the Roosendaalheadquartered firm engages increasingly in rail transport and warehousing, thus offering clients a comprehensive service portfolio. Most of the company’s own vehicles are equipped with onboard computers, enabling realtime data transmission and hence the option to directly manage the fleet. This communication tool helps to improve operational efficiency as well as customer service.
Basically, all major airlines serving Europe are in business relations in one way or another with the Dutch haulier. This is the result of the company’s excellent reputation for quality and efficiency combined with a dense road feeder network that covers the entire continent.
According to CEO Sebastiaan Scholte his firm currently deploys 850 vehicles, of which 35 per cent belong to subcontractors. These partners
‘we screen thoroughly to make sure they keep up to our own standards, including security training of their drivers’. Due to cost reasons about 50 per cent of Jan de Rijk’s fleet is operating with a licence from one of the Eastern European countries. Price pressure is enormous but again, if customers opt for product quality, they are not well advised to choose the cheapest market player for performing their road transport. Cheap can become expensive very quickly if mistakes happen or drivers are not able to understand the contents of declarations on dangerous goods or other documents accom
panying shipments.
Air freight accounts for 40 per cent of the Dutch company’s business, with 60 per cent related to warehousing, rail transport and other segments.
‘In case of a crisis it’s better to have more than one egg in the basket,’
Sebastiaan states. He speaks of ‘three drivers for profitability’, all of which must be met to end up in the black:
1 high load factors throughout the year;
2 sufficient yields per kilogram and driven kilometres; and 3 constant utilization of the rolling asset.
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Scholte says:
Considering the predatory competition we need to drive as many kilometres as possible to balance our fixed costs. However, bottlenecks and slow throughput of shipments at major airports are increasingly hindering trucking firms from running their vehicles on schedule. The results are supply chain disruptions and reduced quality of air freight processes. What we and other road feeder service providers urgently need are fast turnaround times at gateways, thus enabling a seamless flow of shipments and a constant usage rate of our vehicles.
Lately, things have taken a turn for the worse, with waiting times getting longer and longer, particularly at large hubs like Amsterdam, Frankfurt, Heathrow or Charles de Gaulle. The downtime for his and other firms is growing constantly, especially at peak times each Friday and Monday. He blames the low margins in air freight handling for the mess. Why, the manager also indicates:
Because labour is the biggest cost factor for handlers, they don’t increase their staff on days with heavy traffic in order to prevent additional expenditures in personnel. Even if they would like to hire more staff their capabilities are very limited due to the extremely low margins obtainable in this fiercely competitive field. Therefore, slower air freight processing within the handling agent’s warehouses is the obvious consequence. The entire case wouldn’t be as harmful for trucking firms if the handlers would communicate any congestion or delayed pickup times at an early stage, which most of them unfortunately do not. In that case we would be able to reroute our trucks and change their schedules at short notice.
Given this, it seems obvious that if we are to improve the transit times for scheduled air cargo and make it competitive again, this is one area that TIACA and IATA should be focusing on. The RFS trucking companies are crying out for efficiency improvements that could only benefit everyone in the supply chain.
Meanwhile, another major RFS supplier Wallenborn is in the starting blocks to take the next step: expanding into growing markets outside the EU. He speaks of the United States, Latin America and the Middle East being under close consideration. Says the manager: ‘Currently we are talking to potential partners, but nothing has been concluded at this stage.’
Wallenborn has even expressed interest in opening in China, no doubt to serve Cargolux and AirBridgeCargo, two of its biggest European clients.
So what about the hundreds of small and mediumsized players that are trucking goods from airport to airport and try to stay in business? Almost all of them lack the capacity and financial resources to challenge the big
operators like Jan de Rijk, Arthur Welter, Wallenborn, DB Schenker, Panalpina and others. They basically have three choices to survive:
1 the independent: deciding on standing alone as long as possible operating as a niche player;
2 becoming a subcontractor of one of the larger enterprises;
3 joining forces and forming their own alliances.