Tomasz Langowski: High prices in transport accelerate consolidation of industry

2021/08/26 at 5:28 PM

With high freight prices, entrepreneurs have to decide whether the import is now profitable for them, or whether it is better to use other approaches for obtaining materials or semi-finished products. The current situation contributes to the consolidation of the logistics industry, says Tomasz Langowski, vice president of Langowski Logistics.

How are shippers coping with the current difficult situation in maritime transport?

High freight rates affect the profitability of imports. Some importers have no choice because their supply chain is structured in such a way that they have to import goods and agree to current freight rates. Entrepreneurs have to decide whether the import is profitable for them now, or whether it is better to use other approaches for obtaining materials or semi-finished products. In the case of export to Asia, Australia or America, there is a problem with the availability of cargo spaces. It happens that customers have to wait several weeks for confirmation of their place on the ship. It is difficult to arrange transportation, especially on a day-to-day basis.

Port Gdynia, source: Langowski Logistics

Does it happen that customers give up orders due to high transport prices?

Yes, it is visible. However, in the current situation, we talk to customers, demonstrate to them all available solutions with various options for price, delivery time and space availability. Some companies are now resigning from importing. This is especially true for low-value goods, the import of which has ceased to be profitable. On the other hand, the current situation on the market means that there are new customers who are looking for better prices and places, as their current forwarders cannot cope.

Does this situation affect the consolidation of the industry?

Yes, it is already happening. With import rates from China reaching several thousand dollars per container, many smaller companies have a problem with financial liquidity, because they use solutions that force prepayments on them. This strongly affects the activities of shippers. We can also see that large companies such as Maersk, DSV or Rhenus are making acquisitions.

And how is the transport on the New Silk Road developing now?

In the first years, the project relied on subsidies from the Chinese provinces. As a result, two years ago, the prices for transporting containers by rail on this route were attractive. However, currently, due to the situation on the maritime transport market, i.e. high freight rates and a lack of space supply, these prices have increased.

In recent years, many companies have become interested in rail transport to maintain their supply chains. However, it must be remembered that the supply of cargo places on the New Silk Road is many times smaller than in sea transport, which, coupled with high demand, resulted in an increase in prices. There were also considerable problems with congestion on the China-Kazakhstan border. Renovation works on railway lines in the Terespol area and on the E20 mainline (that runs from Terespol to Rzepin via Warszawa and Poznań –IntermodalNews.eu) additionally reduce the capacity of the Polish section of the New Silk Road. For this reason, some trains have recently been redirected from Małaszewicze to Kaliningrad. Floods in China and Europe also influenced the possibilities of organising transportation. Moreover, the Port of Ningbo and earlier Yantian were closed, which also had a negative impact on the entire transport industry.

Langowski Logistics arranges the container train between Xi’an and the Port of Gdańsk, source: Langowski Logistics

What activities is Langowski Logistics taking at present?

We recently opened a new branch in Małaszewicze, which facilitates contact with key partners in this most important place on the New Silk Road. We are currently hiring new employees. We are also investing in new IT systems and warehouses. This year we moved to a new, twice as large warehouse in Gdynia. It is a class A facility located in the immediate vicinity of the BCT and GCT terminals. This investment is important in the context of the plans to build a new deep-water terminal in the Port of Gdynia. We also want to increase our warehouse space in Gdańsk, Pruszków and Łódź. These investments will start this year, ultimately reaching the level of 35,000 square metres in total.

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