Transport & Logistics 2019

transport & 2019 logistics

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TRANSPORT & LOGISTICS FORTHCOMING TRENDS

Risks And Opportunities Like most other industries, transportation and logistics (T&L) is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models 4

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here are many ways the sector could develop to meet these challenges, some evolutionary, others more revolutionary.

In this paper we discuss four key areas of disruption logistics companies need to focus on now, and explore some possible futures of the industry.

FOUR AREAS OF DISRUPTION Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and – in the case of consumers – at low or no delivery cost.

Manufacturing is becoming more and more customised, which is good for customers but

hard work for the logistics industry. Add it all up and the sector is under acute and growing pressure to deliver a better service at an ever lower cost.

It can only hope to do this by making maximum and intelligent use of technology, from data analytics, to automation, to the ‘Physical Internet’. This promises lower costs, improved efficiency, and the opportunity to make genuine breakthroughs in the way the industry works.

But ‘digital fitness’ is a challenge for the sector, which is currently lagging many of its customers in this respect. Attracting the right skills is one issue, but developing the right strategy is even more crucial.

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An increasingly competitive environment is another big factor in the mix. Some of the sector’s own customers are starting up logistics operations of their own, and new entrants to the industry are finding ways to carve out the more lucrative elements of the value chain by exploiting digital technology or new ‘sharing’ business models, and they don’t have assetheavy balance sheets or cumbersome existing systems weighing them down.

‘Sharing’ is a big story for logistics now – from Uber-style approaches to last-mile delivery, to more formal (joint venture) JVs and partnerships at corporate level, the whole sector is redefining collaboration. But much of this is hampered by inconsistencies in everything like shipment sizes, processes or IT systems.

The Physical Internet promises great things for the sector, coming along with increased standardisation in logistics operations.

POSSIBLE FUTURES What will the logistics marketplace look like in five to ten years? That’s still a very

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open question. If we make a closer look at how some of the key disruptions facing the industry may interact, the future scenarios should involve combinations of these four factors, weighted according to how important specific trends become: The dominant theme in this scenario is the growth of collaborative working, which allows the current market leaders to retain their dominance. This could for example see a greater use of ‘Physical Internet’ (or ‘PI’) solutions, based on a move towards more standardised shipment sizes, labelling and systems Start-up, shake up: in this scenario new entrants in the form of startups make a bigger impact. The most challenging and costly last mile of delivery, in particular, becomes more fragmented, exploiting new technologies like platform and crowd-sharing solutions. These start-ups collaborate with incumbents and complement their service offers.

Complex competition: here the competitive set evolves in a different direction, as large industrial or retail customers and suppliers

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has thus far been slow to seize it. In recent PWC’s study, the percentage of T&L companies that rated themselves as ‘advanced’ on digitisation was just 28%. Some of the industry’s customers are already well ahead of this – 41% of automotive companies and 45% of electronics companies already see themselves as advanced. The lack of a ‘digital culture’ and training is thus the biggest challenge for transportation and logistics companies. T&L firms are in line with other DIGITISATION industries in planning to invest 5%9 of their Logistics companies are facing an era of revenues per annum until 2020, but the next unprecedented change as digitisation takes few years will be critical: companies that don’t start soon risk being left behind permanently Labour is a critical element of any logistics operating model, and up till now there’s always been a trade-off between service levels and costs. But automation breaks down this equation, allowing firms to offer better service and save money at the same time.

Some of the industry’s most labor intensive processes are on the way to being fully or partially automated, from warehousing to last-mile delivery. Automated solutions in the warehouse are already being implemented and their level of sophistication is increasing. For example, automated loading and unloading systems hold and customer expectations are already available, but in the The lack of a ‘digital culture’ and training is evolve. New technologies are enafuture these are likely to be able thus the biggest challenge for transportation to bypass obstacles and adjust bling greater efficiency and more and logistics companies routes automatically. Advances collaborative operating models; in data processing and optics now they’re also re-shaping the marketallow tasks to be automated which were once place in ways that are only just beginning to cantly improved forecasting to scale capacity thought too complex – like trailer loading and become apparent. New entrants, whether they up or down and plan routes. Adding machine offloading at acceptable speeds. be start-ups or the industry’s own customers learning and artificial intelligence techniques to Package delivery could also make more and suppliers, are also shaking up the sector. data analytics can deliver truly dynamic routing. use of automation, through innovations like The race is on to define the industry’s Cloud technology can enable platform autonomous vehicles or delivery drones. future. And with an estimated US$4.6 trillion solutions, which in turns makes it possible Google has already started working on selfof revenues at stake, companies can’t afford to use new business models, such as ‘virtual driving lockers and the trucking industry is to sit back and watch; they need to adapt to freight forwarding’. It can also provide flexpartnering with OEMs on partially automated changing markets proactively. ibility and scalability, as well as standardized truck convoys. Even if more radical solutions We’ve developed a transformation frameand harmonised processes across the whole are a long time coming, other technologies organisation. That’s especially important work to describe how megatrends affect a which could make drivers more efficient are in for those LSPs or carriers who have grown given industry, taking into account the key the offing too, like augmented reality solutions through acquisitions, and currently rely on a disrupting forces that create uncertainties that give drivers more information about their patchwork of legacy systems. for every organisation in the sector. Based environment and the packages still on board.

The potential is huge, but the industry on these uncertainties, we outline distinct become players in the logistics market themselves, not just managing their own logistics but turning that expertise into a profitable business model. Scale matters: and finally, in this scenario, the current market leaders compete for a dominant market position by acquiring smaller players, achieving scale through consolidation, and innovation through the acquisition of smaller entrepreneurial start-ups.

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scenarios to explore possible futures for the sector. This framework will help you plan for this uncertain and volatile future.

Digital is still a challenge for the sector.

There is no other industry where so many industry experts ascribe a high importance to data and analytics in the next five years than transportation and logistics – 90% in T&L compared to an average of 83%.8 The sector has never had access to more data. There are vast opportunities here to improve performance and serve customers better, and LSPs who are part of a digitally integrated value chain can benefit from signifi-

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BUSINESS NELT, 25 YEARS OF SUCCESSFUL OPERATIONS

NELT’S DISTRIBUTION AND LOGISTICS CENTRE IN DOBANOVCI

Investments Ensure Success The Nelt Group, one of Serbia's most successful domestic business systems today, employs 4,000 people in 11 companies on as many markets in Southeast Europe and Africa. As a leader in the provision of state-of-the-art distribution and logistics services, the Nelt Group will generate a consolidated net income of â‚Ź930 million in 2018 8

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he business successes that Nelt has achieved over the past 25 years are the result of constant investments in the improving of services, the applying of new technologies and investment in staff education and development.

In line with the principles of ethical, responsible and sustainable operations, expansion to new markets and further organic growth are planned. This year Nelt started business operations on the Albanian market, with the acquisition of the Tirana-based All Balkan Corporation. Two new strategic partnerships have also been established with Nectar and Nestle in the field of logistics services. Moreover, distribution on the markets of the Western Balkans of the brand TRANSPORT & LOGISTICS

Nutrino, which produces children's food products at a factory opened in Dobanovci.

This is a greenfield investment worth 34 million euros.

This year Nelt Group invested 15 million euros in the regional expansion of integrated logistics services. There have been investments in the construction of two storage and distribution halls in Belgrade and Sarajevo, with a total capacity of 22,000m2 of warehousing and office space. The fleet has been increased with 30 new delivery vehicles. The capacity of the lorry terminal in Danilovgrad has been expanded on the site of company Montenomaks, which is a member of the Nelt Group. A freight forwarding sector has also opened in Macedonia.

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Digitisation and This year Nelt Group invested 15 million the automation of euros in the regional expansion of logistics processes integrated logistics services. There have is planned to conbeen investments in the construction of two tinue in 2019. WMS storage and distribution halls in Belgrade technology and and Sarajevo, with a total capacity of standards applied 22,000m2 of warehousing and office space in distributive logistics centres in the such as care for new mothers, a company region will be implemented at all regional doctor or private health insurance and onecentres in Serbia. Moreover, there will also off financial assistance for family expansion, be investments in transshipment equipment as well as compensation packages that and software at the intermodal freight stimulate employees in terms of dedication terminal in Dobanovci. and efficiency, and which rewards them Nelt continues its practise of reporting adequately for that. on sustainable business in accordance with internationally recognised GRI methodology. Unlike the first report, which presented Nelt's business operations in Serbia, the second Sustainable Business Report "Healthy Organisation" has been expanded to all Nelt Group companies in the countries of the Western Balkans, presenting data from 2016 and 2017.

The group has entered a new era with a new visual identity and a new CSR strategy, which will focus more on employee engagement, and joint projects with business partners of wider social impact. The company has offered its employees benefits 9

BUSINESS DEJAN TUBIĆ, DIRECTOR, HOLLEMAN TRANSPORT LTD.

Wind Turbines On The Roads Of Europe Over 2,000 wind generators transported throughout the continent of Europe are our speciality

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olleman transport distinguishes itself through the quality of its workmanship, reliability, ease of use and safety. Our Serbian staff members have to date been trained in other countries to prepare for the transport of wind turbines in Serbia. Now we are working in Serbia on the Košava project, says Dejan Tubić, Director of Holleman transport Ltd., speaking in this CorD interview.

Since its founding, Holleman has invested enormous resources in the transport of oversized and heavy cargo domestically and internationally. In which part did you invest the most?

- We try to keep pace with events and novelties on the European and world markets regarding innovation in the transport industry, in order to match the competition on the European market, both in terms of the means of transport we use and the level of services we provide. In addition to modern towing vehicles - tractors and all new traction power features, exhaust 10

gas emissions, we have invested a lot in the procurement of new trailers that are characterised by quality of production, reliability, simplicity of use and safety.

And, most importantly, at Holleman special attention is paid to the continuous education of our personnel; we invest in training drivers and others to make our

service even better, more economical and efficient and, above all, characterised by a high level of safety.

The transport of wind turbines is your speciality. What challenges do you face?

- We are pioneers in this business on the European market, as shown by over 2,000 wind turbines transported across the continent. Our Serbian staff members have to date been trained in other countries to prepare for transporting wind turbines in Serbia. Now we work in Serbia on the Košava project.

I must admit that we face many administrative problems, without the support of public enterprises, which unfortunately have no interest in jointly presenting the transport of wind turbine parts in a completely We face many administrative problems, new and modern way. Lack of without the support of public enterprises, knowledge and resistance to which unfortunately have no interest in learning and adjustment to an jointly presenting the transport of wind innovative way of working are turbine parts to the European and world the main causes of such unacpublic in a completely new and modern way ceptable behaviour.

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BUSINESS

Cost-Effective And Eco-Friendly Distribution

Responsibility towards business partners, employees and the environment, as a guarantee of success

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s one of the most successful distribution and logistics companies operating on the Serbian market, Centrosinergija works continuously to improve its quality of services for business partners, while taking care of its employees, working conditions and the environment.

As of October 2018, Centrosinergija has been distributing goods to an additional 5,500 points of sale, which means that the company is currently present and available to its customers in a total of 17,000 retail outlets. The company takes great pride in the fact that the expansion of its operations has enabled it to employ a hundred new workers.

“Thanks to great effort, hard work and expertise, we are in a position to meet the high standards and satisfy the needs of the most demanding clients. At Centrosinergija we work continuously to improve our business, while remaining responsible to the society, community and future generations,” says the company’s managing director Zoran Popović.

The project to expand Centrosinergija's volume of business includes investing in the company’s logistic fleet, which has so far consisted entirely of vehicles with EURO 5 new generation engines, in accordance with the European Union's requirements for CO2 emissions reductions. In September this year, Centrosinergija invested in eco-friendly vehicles that run on compressed TRANSPORT & LOGISTICS

THE IVECO BRAND DIRECTOR, MR. PIERRE LAHUTTE, HANDED OVER TO ZORAN POPOVIĆ, DIRECTOR OF CENTROSINERGIJA, THE KEYS OF 11 IVECO DAILY BLUEPOWER CNG VANS

natural gas (CNG) that's compliant with the EURO 6 standard. There are several benefits from using CNG, such as a reduction in harmful gas emissions, the absence of sulphur and organic lead, or toxic petroleum additives, while noise is additionally reduced by up to 50 per cent. The fleet's new vehicles will contribute to reducing exhaust emissions in the most polluted urban zones. In addition to protecting the environment, the purchase of these new vehicles also ensures better care for employees in terms of improved working conditions, reduced noise and more comfortable rides.

“When purchasing new vehicles, we focused on reducing harmful effects on the environment, as well as on the comfort and security of the driver, because we wanted to ensure better working conditions for our employees. Besides

that, vehicles which run on natural gas are more economical than conventional petrol and diesel engine vehicles. One limitation we are facing is an insufficiently developed network of gas filling stations. However, we are hoping that other distribution and logistics companies will follow our example and that this will result in the number of gas filling stations increasing in the years to come. This would make our economy more competitive and preserve the environment.”

By further expanding its distribution portfolio and volume of business in a socially responsible way, nurturing a corporate culture based on respect for the local community and business partners and preserving the environment, Centrosinergija aims to create value for future generations.

For its business partners Centrosinergija ensures sales growth, improved market presence and lower costs by continuously improving business processes and investing in technological development and innovations. The company's unified service of negotiation, procurement, storage, separation, transportation, delivery, sales of goods and services, monitoring and collection of receivables and administration enables its business partners to focus on their core business. Centrosinergija belongs to the Moj Kiosk Group, a business system that also encompasses the largest chain of retail kiosks and convenience shops in Serbia.

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MUAREM RAGIPOVIĆ, MANAGING DIRECTOR FOR SERBIA, EYEMAXX

To European Standards New large scale construction in Novi Banovci by EYEMAXX Logistic Centre Belgrade will enable leaseholders to expand their storage capacities

(Logistics Centre Belgrade) EYEMAXX Real Estate AG is a real estate company with a long-standing successful track record, focussing on residential properties in Germany and Austria. In addition, EYEMAXX also realises nursing homes in Germany and realizes commercial properties in the CEE / SEE region.

In the company’s recent past its corporate strategy has also included developing urban districts in Germany.

EYEMAXX’ business activities take a dualpronged approach. These include high-margin projects and also the continued expansion of its stocks of let commercial properties, which generate ongoing rental income and thus constant cash flows. In so doing, EYEMAXX uses the expertise offered by its experienced management team together with a strong team of real estate professionals, and also a well-established and broad network which opens up additional access to attractive properties and projects. The current project pipeline has thus been expanded to around EUR 975 million.

The headquarters of EYEMAXX Real Estate AG is located in Aschaffenburg, Germany. Operative activities are carried out in Leopoldsdorf near Vienna. The EYEMAXX Group is represented by branch offices and project offices in all countries with active projects like Germany, Austria, Poland, Serbia, Slovakia and the Czech Republic. EYEMAXXEYEMAXX“Logistics 12

Centre Belgrade in Novi Banovci is situated in an excellent location, along the international motorway E-75, only 20km from the centre of Belgrade and 50km from Novi Sad. Only 15km away lies Nikola Tesla Airport. These facts are definitely important for easier placement of goods across the region”, says Muamer Ragipović, EYEMAXX managing director for Serbia to CorD magazine.

“LogMaxx Alpha of 18,000m2 and LogMaxx Beta of 30,000m2 are modern equipped storage halls, built according to the latest standards and respecting all urban, construction and environmental standards. With integrated ESFR sprinkler systems, mobile platforms, loading ramps, state-of-the-art heating and cooling systems and security systems for prevention and enabling quick and efficient response. Reputable leaseholders have moved into the premises.

“We are especially proud to have one of the most modern refrigerator units in Europe operating in the region of 0-4 degrees Celsius.

The leaseholders have parking spaces available with a total area of 10,000 m2”, says Ragipović.

“The centres have been built according to standards applied in the EU. This also applies to all the equipment that is installed and available to our current and future lessees. The capacity of the parking area is also important, both for

leaseholders and for all users of Logistic Centre Belgrade’s services.

“Good ideas should not be changed, so EYEMAXX is starting to build LogMax Gamma, in which around EUR 15 million will be invested.

The building has an area of 22,000 m2 and will be built according to the tried-and-tested EYEMAXX brand for the construction of logistics centres, which has been used in several facilities throughout various European countries.

“Thanks to modern equipment and the type of construction, we are able to meet our leaseholders practically on all issues and requirements in accordance with specific business conditions.

We will soon be able to offer an independent ADR warehouse whose construction is planned.

Here we should certainly bear in mind the fact that existing ADR warehouses on our market have extremely low capacities and as such are deficient, so in this specific area we can display one more advantage over the competition.”

Speaking about the price of the lease, he notes that the price of renting business premises is not fixed, but it depends on the specific demands of the leaseholders.

When it comes to plans, Ragipović points out that because of its large-scale land reserves nearby the Novi Banovci Logistic Centre EYEMAXX is in a position to build considerably more logistic premises at such site in Novi Banovci, which will allow all clients an additional extension and make EYEMAXX even more advantageous on the Serbian market.

You will also recognize the company by its slogans: -PASSION FOR PERFORMANCE -PERFORMANCE AT ALL LEVELS -PERFORMANCE THROUGH SUCCESSFUL PROJECTS -PERFORMANCE THROUGH A CLEAR STRUCTURE -QUICK YET EFFICIENT

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BUSINESS NEBOJŠA RADIĆ, DIRECTOR OF LOGISTIC HOUSE

Trust Is The Most Important Factor In our business it is still much more important to have stable, solid and amiable cooperation and business relations with our clients and partners, who are agents and owners of transport vehicles

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Apart from Serbia and the surrounding region, you've also expanded your operations to EU countries?

- As of this September, we have expanded our business to the territory of the EU and established company Logistic House d.o.o. (Ltd.) in Slovenia. With this move we've become one of the few Serbian companies to operate directly from Slovenia and in that way started engaging a large number of hauliers from the EU with which we overcome problems regarding transport permits, CEMT licenses etc. Our professional team and network of partners worldwide guarantees that LOGISIC HOUSE Slovenia will soon become one of Europe's leading companies in the field of organising

To what extent does the digital transformation process impact on the reliability of transport at your company?

- Today's technology enables us to have incredible precision in terms of information and data from hauliers and vehicles, their location and other associated parameters that enable us to track our clients' goods online. However, in addition to all of the aforementioned, I would like to stress that In our business it is still much more important Which kinds of transport and logistics are to have stable, solid and amiable cooperacovered by Logistic House?

- The core business of LOGISTIC HOUSE is tion and business relations with our clients, the organisation of the domestic and interon the one side, and with our partners, who are agents and owners of transport national transportation of all kinds of goods. vehicles, on the other. We are not assisted We have contracted cooperation with a large in that either by digitisation number of haulage companies, airor the optimisation of busilines and shipping companies, both We are one of the few Serbian companies to with small players and the largest. ness processes, but rather by operate directly from Slovenia and in that way This ensures that our company has knowledge, persistence, preciengage a large number of hauliers from the EU plenty of room to choose and lobby sion, fairness and the quality of with which we overcome problems regarding for the best offer for our clients. services provided... Alongside transport permits, CEMT licenses etc For our many clients, we conduct all the digitisation offered by regular import operations and offer today's technology, last week promotional prices for exports, in order to the transportation of goods according to the saw the entire Logistic House team visit a help the Serbian economy at least a little. highest international standards. The essence client for an hour to help with the unloading We organise daily container transports, air of logistics is in strategic planning and timely of goods from a lorry to a warehouse, due cargo shipments, oversized freight shipments consideration of possible shortcomings in to a fault with the forklift. So, digitisation and road-based haulage throughout Europe, maintaining the entire chain of logistics, as helped us in that we learned about the Russia and Africa, while we have direct agents well as undertaking preventative action to client's problem on time, but we still had in Ghana, Nigeria, Burkina Faso, Vietnam, ensure solid connections between links in to don our overalls and roll up our sleeves.

Turkey, China, America, Greece etc. the chain at all levels.

Such is our job! e organise daily container transports, air cargo shipments, oversized freight shipments and roadbased haulage throughout Europe, Russia and Africa, while we have direct agents in Ghana, Nigeria, Burkina Faso, Vietnam, Turkey, China, America, Greece etc., notes Nebojša Radić, director of LOGISTIC HOUSE, speaking for CorD.

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