The shortage of drivers in Hungary today is so severe that haulage companies could hire up to 8,000 drivers with immediate effect. However, the main reason for the transportation crisis is not this, and not even the problems with supply chains, but the fact that demand and thus the need for shipping is growing by an average of 10 percent a year, and the transport market is unable to keep up with that. The global shipping crisis will therefore certainly not be resolved in the short term, claims Zsolt Barna, CEO of Waberer's International Nyrt.
The recent period has also made life difficult for international haulage and logistics companies. Large companies such as Waberer's were probably no exception. What were the most significant challenges for you in the past year?
All developments that newspapers wrote about affected the Waberer's Group as well.
Internationally, the labour shortages among drivers in particular, the inaccuracy of forecasts due to supply chain disruptions, and the difficulties in allocating capacity, for example, with booms and busts in the automotive industry.
In logistics, we sometimes found ourselves not having enough warehouse storage capacity, and at other times having unused capacities, when our clients did not have enough stock available.
In addition to all that, there were infrastructural problems in rail transport, accompanied by capacity shortages and the resulting delays and unreliability; in the case of maritime transport, the frequently mentioned container shortages and the sometimes unpredictable volume fluctuations caused by the rise in freight rates. We have a year behind us that was full of challenges.
How much has road, sea and rail transport become more expensive in the last year; how much have freight rates increased?
In maritime transport we are talking about an increase of up to ten times, while in road and rail transport the increase was 12 to 15 percent in general from the beginning of last year.
What is the reason for the increase?
First and foremost, the rise in fuel prices: fuel costs make up 40 percent of all road freight costs, and the energy need is similar in case of rail transport. But asset costs have also risen.
A year ago, the purchase price of a diesel truck was around 90,000 euros, while today it is 115-120,000 euros. The electric version of the same truck costs 350-400,000 euros.
In addition, road and rail tolls are rising every year, and the wages of truck drivers and train drivers are also growing by more than 10 percent, which is also reflected in rising freight rates.
How much does it cost to ship a container from China to Europe now, compared to a year ago?
In 2020, a standard 40-foot container could be shipped from Shanghai to Europe for an average of 3,500 dollars, which rose to 15,000-16,000 dollars by 2021. It is roughly a fivefold increase.
Has Waberer's lost any clients because of the increase in freight rates?
Due to the driver shortage mentioned earlier, and the fact that many companies were unable to replace their vehicles in time due to supply chain issues, capacity shortages have become common in the freight market, despite the increase in freight rates. However, this has put us in a favourable situation, so we are better able to choose our clients.
We hear a lot about the shortage of containers, the fact that there are container ships stuck off the coast of the United States, but also in European ports, waiting to be unloaded, and it is holding up the whole process. What can shipping companies do about the problem of container shortages? How much has the price of containers grown?
It is difficult to say, because it is not only the strong demand that is causing containers to become more expensive, but also the rising steel prices and production costs. But it is safe to say that there has been an increase of 30-40 percent. Currently, a 20-foot container costs 5,500 to 6,000 dollars, while the price of a 40-foot container is 9,000 to 10,000. However, haulage companies do not typically buy containers, only shipping companies do.
You mentioned labour shortages. How severe is this problem at Waberer's now?
There is a very serious shortage of drivers in the whole of Europe, including in Hungary, with 8,000 vacancies for drivers to start immediately in this country alone. By comparison, there are about 20,000 truck drivers on the market today.
Our company is in need of 200 new drivers, while at group level we employ around 3,600 drivers in total.
Can the wages you offer keep up with the competition? On your website, you are looking for drivers for a gross salary of 600-650 thousand forints, while there are companies offering as much as 750-850 thousand forints net.
We know that many companies lure drivers with higher wages than us, but drivers are often disappointed because they are expected to do extra work for the higher salary. With us, both the workload and the pay are average, but we offer excellent working conditions, and with this combination our offer is still competitive. This is also demonstrated by the fact that in our international business, where we employ the largest number of truck drivers - around 2,000 - we managed to eliminate the labour shortage by the end of last year. Of course, this is also due to the fact that
we have been looking for alternative labour markets over the last six months, and we have been working not only with Hungarian, but also Ukrainian, Romanian, Polish and Serbian drivers.
Will you raise wages this year?
Yes, we are planning a double-digit raise.
You also use "recruitment money", i.e. experienced colleagues are paid 200 thousand forints gross if they bring in one more person. Other companies also offer this kind of incentive. How long have you had this practice at Waberer's?
It has been used for several years and in our experience it is effective, because it sounds more authentic if a colleague is recommending the company than if the company is promoting itself.
Have the problems you mentioned significantly increased delivery times?
In rail transport, 24-48-hour delays are typical compared to the original transit times, and we also communicate this to our customers. In road transport, transit times have not increased significantly,
of course, local Covid rules can modify that, but as far as we see since the third wave countries have been handling the specialities of road transport quite well. The pandemic alone no longer means an extra increase in transit times. Significant delays are typical, however, in transport to Britain, but it is not the pandemic but Brexit that is to blame for that.
How has Brexit affected Waberer's? Has the volume of transport between Britain and the continent changed?
We have a significant market in Britain, currently accounting for 30 percent of our international business. What we saw is that only large companies like us were able to overcome the administrative hurdles of Brexit, and as a result, a lot of them withdrew from the market from January 2021. This led to capacity shortages,
so Waberer's could even benefit from that.
What are the busiest transport routes in the world today?
It has become completely unpredictable, as it is affected by so many factors: the condition of the tracks, loading and unloading capacities, strikes, or even current restrictions. Our engineers, who plan the routes of our fleet every day, and our planning systems are constantly monitoring the changes and trying to optimise the routes accordingly. One of the biggest lessons we have learnt this year is that you have to be able to re-plan everything again and again.
The end of the year is always a busy time for shipping. How much did the general hecticity of 2021 affect the 2021 Christmas season?
Very much so. While previously there was always a 30-40 percent surge in freight capacity needs at the end of the year, last year we saw overnight jumps of up to 100-200 percent. To give you an example:
we serve Tesco stores with an average of 200 trucks a day, but now it occurred that we would have needed 300 trucks as there were so many goods arriving at the same time.
It also means that we employed far more people during that period, not just in haulage, but also in warehousing, material handling and packaging. But here, too, we use foreign labour as well, and student work and other flexible forms of employment are also very good opportunities.
What are your expectations for 2022?
Based on our clients' forecasts
this year will be similarly challenging, and the problems of labour shortages and supply chain disruptions are not likely to be resolved either.
The success of Waberer's, however, is often linked to crisis situations, proving that the company is capable of adapting quickly and flexibly to such special situations. It is no coincidence that we are one of Europe's leading international hauliers and the market leader in Hungary in domestic freight transport and complex logistics services. We are also trying to be proactive now, for example by integrating small entrepreneurs, helping them survive and, of course, significantly increasing our own capacity at the same time.
How long can this global transport crisis last; how long can it be managed?
My personal opinion is that this problem cannot be resolved in the short term, because global consumption is growing every year and the main cause of the current transport problems is not the shortage of drivers, chips or containers, nor the disruption of supply chains, but the steady growth in demand that the market simply cannot keep up with.