Comprehensiveness of OstSped’s service ensures resistance to crises in the logistics industry
The OstSped Group, which recently celebrated its 30th anniversary, is developing sustainable intermodal connections and investing in digital and green solutions. We talk with Mariusz Kąkol, CEO of OstSped, about the company’s plans and the situation in the logistics industry.
The coronavirus epidemic and the war in Ukraine caused a lot of turbulence in the European economy and logistics industry. How did the OstSped Group deal with this situation?
– The last few years have been a period that brought many unexpected situations that were more challenging for logistics companies than the 2008 financial crisis, which was the first such event affecting our company. The OstSped Group started operating in 1992. After the 2008-2009 crisis, we thought that we had gained experience in how to deal with difficult times. However, much greater turmoil was caused by the effects of the coronavirus pandemic and the war in Ukraine, in which many countries are de facto involved. Although it takes place in a small area, its effects have an impact on the whole of Europe and the world. Our company coped with this situation. OstSped not only survived a large increase in fuel prices, pandemic restrictions or problems in global supply chains but in 2022 we recorded the best turnover result in the history of the parent company and maintained profitability despite higher costs in this industry.
What were the most important challenges faced by the transport industry last year?
– Last year, the most important issue for the industry was a large increase in fuel and electricity prices. It’s slowly stabilising now. However, the problem with the employment of drivers is becoming visible again. It seems that this shortage of drivers in the labour market will be very clear in the long run. The costs for moving goods are still high, and customers do not want to pay higher freight rates, and it is difficult to pass on this increase in costs to them.
However, according to industry associations, the increase in costs has affected rail and intermodal transport more than road transport, as electricity prices have increased more than fuel ones.
– We notice quite an interesting phenomenon, namely that many road carriers have not increased their transport rates. It is puzzling why this is happening. Perhaps, they had large margins and kept prices at the expense of profitability. There are also voices that some carriers today do not know whether they are profitable. Generally, costs have increased and most companies in the industry have raised their prices. This applies in particular to intermodal transport, where the increase in traction energy prices forced rail carriers to raise prices, and as a consequence, we as a logistics operator also had to do it. There was no other way.
Last year, the volume of freight transport in Poland and Europe decreased. How do OstSped’s results look like against this background?
– We manage in a complicated market situation. Last year, we recorded an increase in the number of transports performed. I hope this trend will continue in 2023. Our philosophy of being a group of companies with high flexibility and providing comprehensive customer service will, despite difficult times, continue to bring positive effects in the form of increased turnover and profitability.
In which directions and categories of goods have you achieved an increase in transport?
– Our most important serviced direction in terms of intermodal transport is the movement between the Baltic Hub and our terminal in Szamotuły. We are investing in this solution. We buy new reloading equipment for the terminal. Domestic and international road transport on the Polish-Europe routes is developing well. We managed to expand them, although there are visible problems in the industry and there are fewer such orders in the market.
Turmoil in supply chains has caused a large increase in demand for warehouse services in previous years. Have you also felt this trend?
– Warehouses are an important part of our business. PST OstSped has over 60,000 sq. m of warehouse space in Poznań, Wrocław, Gliwice and Kalisz. After a period of coronavirus restrictions and war-related unrest, many companies had to rebuild stocks. Moreover, the decline in consumption that was visible last year also caused many productions to be moved to warehouses. This resulted in an increase in demand for warehouse services. Customers’ interest in warehouses is very high, as some customers have problems with sales.
The warehouse logistics sector and the entire economy are currently negatively affected by the increase in electricity and gas prices. To remedy this, we are investing in photovoltaics. OstSped has its own warehouses, but we also use space that we lease from our partners. The increase in the euro exchange rate caused the costs of renting these facilities additionally increased, despite the factors such as the cost of energy.
For OstSped, the basis of its activity was the comprehensiveness of the service and this allows it to survive in more difficult times. Our experience and that of our partners from different countries show that if warehouses do not make money, you can get more revenue from transport, and vice versa, when sales fall and there are fewer orders for transport, the demand for storage increases. These services are usually balanced.
What are your plans regarding the terminals in Kalisz and Szamotuły?
– Intermodal has become a very important part of our business. Especially nowadays, when there is plenty of talks about sustainable development. Transporting containers by trains is a part of the direction the world is going. Regulations such as “Fit for 55” and the struggle to keep the temperature increase below 1.5 degrees causes logistics to also move towards zero emissions. Today, we greatly appreciate the fact that we once invested in the intermodal business and are developing it. We are currently modernising the siding and investing in reach stackers. I hope that an electric crane will also be built at the terminal in Szamotuły.
We are also preparing for a new EU competition to co-finance intermodal projects. We are waiting for this competition to start. The EU funds are great support for entrepreneurs, especially when the increase in costs is visible. Obtaining funding is necessary in the case of capital-intensive investments.
OstSped invests in photovoltaics and charging points for electric cars. What is the significance of such actions?
– Of course, e-mobility is the future but, first of all, you need to create the appropriate infrastructure to charge vehicles. Initially, we will use private e-cars but we are also preparing to launch charging points for electric trucks. However, the market is not ready for this now. The prices of these cars are very high compared to diesel trucks. Let’s hope that there will be a reduction in these prices as production volumes of these types of vehicles increase.
However, our customers are interested in this solution and we are preparing to build e-truck charging points. E-mobility in road transport will probably develop in the first- and last-mile services. In long-distance transport, it will be more rational to use railways and intermodal transport will be promoted. We are also working on launching new intermodal connections, including the transport of semi-trailers.
However, we already use electric private cars and have charging points in our locations. We will also continue to invest in photovoltaics, both for the needs of our warehouses and electric vehicles.
What are OstSped’s plans for the coming months?
– We will invest in optimising our operations, including the digitisation of processes and the development of our transport, terminal and warehousing services. We are introducing modern, energy-saving solutions, not only for environmental reasons but also for making our business even more profitable and more flexible.
Thank you for the conversation.