Success depends on a quick response
For the past two years, the whole society has been affected by the impact of the COVID-19 pandemic. We have experienced events that we could not have imagined before - store closures, production disruptions, bans on free movement and shortages of many goods or parts for production. In the midst of all this, we were totally dependent on transportation. How did the world of logistics cope with all these unexpected problems? We asked Daniel Knaisl, Managing Director of Geis CZ.
The never-ending turbulent period is referred to as a crisis. However, every crisis, in addition to its many problems, also creates new opportunities. In retrospect, how do you see the last two years from Geis' perspective?
Every sudden change that needs to be reacted to quickly generates both risks and opportunities. Those who can react quickly and adapt to the situation have a chance of success. We too had to react very quickly, introduce many new measures and cope with sudden changes, such as the closure of many of our clients' brick-and-mortar stores on the one hand and the e-commerce boom on the other. This experience has definitely made us stronger, and our good results over the past two years show that we have coped well.
Logistics has recently been confronted with many new problems requiring non-standard solutions. In which area do you think you have been particularly successful?
We have certainly been successful in responding quickly to the situation - from supplying areas and cities completely cut off from the outside world, to quickly providing additional capacity in our warehouse logistics projects for e-commerce, where there has been a literal explosion in orders, to dealing with an extremely complex situation in sea freight.
Government measures supporting sectors that have stagnated as a result of the crisis, not only in this country but practically throughout Europe, have essentially frozen the labour market. Yet the logistics sector is highly seasonal and depends heavily on the frequent need to recruit short- and medium-term workers quickly. How have you managed and are you managing this?
The situation on the labour market has been dire for a long time, and has worsened during the pandemic. In addition to increased sickness, quarantines and PPE, many foreign workers have left the country and have not returned. The long-term situation, where there are many more vacancies than unemployed people in the country, has thus only deepened. Especially in warehouse logistics for e-commerce, we were recruiting and training more workers from the catering and tourism industries at the peak of the pandemic. Picking up goods involves quite a bit of walking, which, for example, former waitresses didn't mind at all because they are used to walking. However, a large number of our positions require certain qualifications, such as a truck driving licence, and these cannot be obtained in a short period of time. Therefore, workers from other fields could not help wherever needed.
The logistics industry has recently been faced with rising fuel and packaging prices, of which there is often a critical shortage. It is logical that the consequence of this is, and will continue to be, rising prices in transport. Is it possible to estimate the order of magnitude of these increases in the near future and what should customers be prepared for?
Fuel or packaging materials are not the only items whose prices have risen dramatically. Warehouse rents, prices for construction materials and labour have also increased, all energy costs have risen, handling and transport equipment prices have increased and so on. Inflation, of course, pushes up costs and prices, and thus increases the pressure on labour costs. Naturally, we had to react to all this and adjusted our prices towards the end of the year. Unfortunately, I am convinced that price adjustments will also be necessary this year because of the ever-increasing costs.
Repeated closing of deals has led to a large increase in internet sales. How has this affected your business?
During the first lockdown, closing brick-and-mortar stores was a completely new experience for us and our clients. Many shipments were already on their way, but the stores were closed or didn't have the capacity to receive additional merchandise because they couldn´t sell the previous. We had to start communicating very quickly with our suppliers and customers, and work together to find a solution so that Black Peter was not left to us, and we didn't overwhelm our cross-dock warehouses with undeliverable goods at a time when we were already being inundated with e-commerce goods. Because we offer warehouse logistics, full truckload shipping and other products in addition to our own shipping system, we were able to help many clients with the situation without having to make complicated returns to, for example, a foreign warehouse. In some cases, undeliverable goods could be placed in our warehouse logistics facilities. During the next lockdown, everything worked according to proven scenarios and we did not experience any major problems.
Many manufacturers complain of broken relationships with their subcontractors. Large volumes of goods are not delivered on the dates ordered - either because the customer does not need them in the quantities or on the dates originally anticipated, or because the supplier is unable to meet the original deadlines due to problems with its subcontractors. This puts carriers in a very difficult situation. Does this also apply to Geis? And if so, how do you deal with it?
The global supply and logistics chain has simply broken down. For the last decades, logistics professionals around the world have been working on an ideally just-in-time connection, and it all collapsed like a house of cards. It started with the closure of specific factories, mainly in Asia, continued with the clogging of important ports and transport routes, and culminated in a lack of capacity. Who would have ever thought that desperate companies would pay huge sums for trucking from China just to have goods or to meet their contractual obligations. Components are missing, specific types of goods are missing, deadlines and prices cannot be relied upon, and so on. Anyone who has ordered a car recently knows this. They have no guarantee of delivery or that the car will arrive with the equipment they ordered. Many companies did not have enough stock for Christmas sales before Christmas. I know from personal experience that to buy snow boots now, for example, is really a minor miracle. Even the manager of the store where we finally succeeded was waiting for the few pairs they got to have for her child. It reminded me of a time before 1989. This is also why more and more companies are considering rebuilding local warehouses to hold at least minimal inventory and no longer have to rely solely on timely shipments from Asia. This also applies to the production of specific components such as chips, which have hardly been produced in Europe, but also in America in recent years, and we have been dependent solely on imports from Asia.
A significant proportion of goods currently reach customers in Europe from China. However, transport from China has recently faced many problems. How are you coping with them and what specific solutions can you offer your customers?
Shipping from China or Asia has been a nightmare lately. Shipping prices have exploded and nothing is certain, neither capacities nor deadlines. Companies are booking expensive charter flights in a pinch to get goods to Europe. The boom in trucking from China is further proof that something is wrong.
There is growing pressure from the European Commission, influential NGOs and many companies trying to build their green image to reduce the environmental impact of transport. This is not always technically easy or even realistic, and in any case it means the threat of further price increases. How does Geis view this development?
Sustainability and striving to minimise the negative impact of our activities on the environment is one of our priorities. The Geis Group has its own sustainability policy and we are taking many steps to contribute to climate protection. Our company has undergone an energy audit, and we measure and evaluate virtually all energy consumption at our sites and their carbon footprint online. Every year we invest in renewing our fleet to meet the latest and most stringent environmental standards. On the other hand, we are realistic and don't want to build air castles just for the sake of attractive marketing. While we are testing electric vehicles, we are also aware of the current very clear technical limits of pallet transport. It is one thing to have a small van delivering lightweight envelopes or parcels around town, and another to have a car that is expected to carry several tonnes of palletised cargo for hundreds of kilometres. I rather believe in the future of hydrogen for now. In the case of pallet shipping, I also don't have much faith in pallet delivery via cargo bikes. For parcels, it is conceivable in city centres and even manageable and efficient for small lightweight shipments, but I don't see it that way for pallets.
From your point of view, what would be the most helpful solution to the current transport problems?
There are so many problems now that there is no simple solution or answer.
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