Pan-European general cargo transport
As a Pan-European cargo traffic is the distribution of general cargo in Europe by land, referred to water and in the air.
The competition in the European general cargo market mainly takes place in land haulage . The Integrator transports, which are largely based on air traffic, are not able to transport classic piece goods due to the high level of automation and the associated weight and volume limits. Here the integrators enter into cooperation with established general cargo forwarding companies in order to offer customers a wide range of services.
General
There is no longer a general cargo transport in Germany. The company policy consisted of letting this market segment run out without further investment, as it was considered to be highly deficient. In favor of positive contribution margins, it was kept in Bahnrans until the company was renamed. After the rail transport was sold to the Belgian company ABX Logistics , most of the traffic was transported by truck.
This does not mean that there are no general cargo transports by rail. Rather, the railway leaves the bundling of consignments to the forwarding agents, who then use the railway as a carrier in combined transport or in classic single-wagon transport. Around 70% of EU transports (measured in tkm) take place over a distance of 150 kilometers and more and are therefore basically also rail-related. In order to increase the efficiency of single wagon traffic, DB Cargo AG is concentrating on around 320 major customers who make up 85 percent of sales as part of the MORA C restructuring concept . In contrast to the French railways SNCF , which has completely stopped wagonload traffic, DB Cargo expressly emphasizes the importance of this offer for its own company. However, due to the different importance of the general cargo business for the individual European railway companies, the performance of European rail shipments is severely restricted.
Of the approx. 3300 forwarding companies in Germany, 47% offer their customers general cargo services, with 26% seeing this as a service focus. The Dr. Städtler logistics study arrives at similar figures in which 24% of the forwarding participants stated that they are active in groupage transport. 16% offer national general cargo transports and 8% offer international general cargo transports. There are serious differences in the parcel and express service area. While the BSL study indicated a focus on performance in 11% of the companies, this was only 4% in the Städtler study. Although the CEP market in particular is in an expansion phase, this significant difference cannot be explained solely by growth within a year. Basically, there is only very poor data available on the development of the German small goods market.
Overview of providers of European general cargo transport in road haulage
Importance of the middle class
The German transport market is characterized by a strong representation of small and medium-sized enterprises (SMEs). Of the approx. 128,000 transport companies in Germany, 23,200 are medium-sized companies; the vast majority of 104,000 are small businesses. This strong presence of SMEs in the freight carrier sector can also be seen in the approximately 3300 freight forwarding companies. Only a few companies, as corporate forwarding agents and multinational companies, can really be classified as large corporations.
The advantages of a mostly owner-managed SME are, due to the close connection between economic success and the manager himself, the flat hierarchies and a often found unit of entrepreneurs (owners) and companies (employees) in a strong innovative strength and flexibility, as new ideas in such Organizational forms are easier to implement. Combined with proximity to the customer, this results in a decisive competitive advantage over large corporate forwarding companies, especially for logistics. The companies assign around 37% of all transports to regional service providers.
As a result of the Europeanization of procurement and sales channels and the increased outsourcing of intelligent services, the range of activities of traditional freight forwarders is changing significantly. The change from freight forwarder and forwarding agent and logistics service provider to logistics system development partner requires not only the classic advantages of SMEs but also speed, IT competence and internationalization. However, sophisticated IT technologies are often associated with high financial requirements and internationalization is difficult to implement for many SMEs.
Transport companies have always had cooperation in the form of correspondence on a horizontal level. Due to the demands of the market, franchising has established itself as a closer association for certain industry segments. Through such cooperation, the advantages of large companies, which are mainly based on the European area presence, can be developed and combined with their own competitive advantages, the ability to adapt to customer-specific requirements. In the area of pan-European general cargo transports, at least 10 partnerships have emerged, most of which rely on the concept of franchising. General cargo transports outside of specialized sub-markets have to face competition from high-performance large freight forwarders.
Franchising for SME groupage freight forwarders
In the case of transport companies, franchising represents a possible form of cooperation in order to build national and international networks on a horizontal level, coordinate transport services and develop and offer a centrally managed brand with uniform services.
The American definitions of franchising are very broad and, according to European and German understanding, clash primarily with the problem of bogus self-employment . The definition commonly used in German literature from 1968 neglects the duties of the franchisor, since at this point in time potential criminal behavior was probably not yet considered. In 1986, case law gave its definition of franchising in the so-called Eismann judgment. The definition of the European Franchising Federation (EFF) contains five essential key points. Accordingly, franchising is
- (1) a distribution system for services and / or technology
- (2) on a cooperative basis legally independent companies. The content of the franchise agreement is
- (3) the right to use the brand, technical know-how, organizational methods and concepts and the
- (4) Ongoing technical and business support and training by the franchisor. For this receives
- (5) the franchisor receives direct or indirect compensation.
It is crucial that the franchisee continues to act in his own name and for his own account and must therefore always ask himself whether the economic benefit exceeds the fees to be paid. With Eastern European traffic in particular, there is a risk that franchisees will not work profitably due to insufficient feed-in into the system. In order to preserve the quality of the brand, the franchisor is also required to recognize this, if possible, before signing a franchise contract.
Franchising offers general cargo forwarders the advantage of access to a ready-made distribution system with an established brand and a uniform appearance. This allows the forwarding company to concentrate on its competence, the organization of the freight transport, and hand over the marketing and advertising measures to the system headquarters. In addition, the franchisees are relieved by the fact that the system center takes on the maintenance and further development of the IT systems, legal contracts and, on a case-by-case basis, personnel development. On the one hand, this can reduce the financial requirements of an SME, but on the other hand, raising capital is made considerably easier thanks to the strong brand. Both the franchisor and the franchisee should make sure that, despite the legal independence, the companies are not organized separately, but rather a coordinated process organization is established.
Problem areas of pan-European general cargo transport
In the following, problem areas in general cargo transport are systematically recorded, excerpts are examined more closely and development trends are shown.
Analysis framework
The performance (performance [P]) of a European general cargo network, measured for example by the average speed of a transport from any source to any sink, is determined by the two variables of demand and network intensity. While the demand intensity results from the quotient of the two variables transport demand (demand [D]) and network capacity (capacity [C]), the network intensity (cohesiveness [H]) is a multi-dimensional and multivariate variable. Thus, the mathematical functional relationship P = ƒ (D / C, H) generally applies.
Within the provision of services for pan-European general cargo transport, a distinction can be made between the static design of the network, in physical and organizational form, and the dynamic form of the production process. These include (1) the choice of the mode of transport, (2) the technology in terms of process design in the context of transport, handling and storage and (3) the use of new information and communication technologies (ICT). The concept of communication barriers according to Nijkamp and Rietveld (1989) is used to identify problem areas within the criteria of network capacity , network demand and network intensity that are responsible for network performance. According to this, communication barriers are understood to mean all obstacles in space and time that - beyond the usual extent to be overcome - restrict the problem-free transfer or the free movement of information and activities. Communication barriers can be divided into natural and man-made barriers. The natural ones include:
- Barriers created by different time zones,
- physical barriers such as mountains (Alps, Pyrenees) or seas (e.g. between Great Britain and the continent) and
- Cost barriers that must be raised due to the first two natural barriers.
The communication barriers created by humans include:
- Political barriers within Europe in the groups of the (a) internal market of the EU with largely harmonized national rules and regulations, the group of (b) Visegrád states, which include Poland, the Czech Republic, Slovakia and Hungary, and the group of (c) remaining states of Central and Eastern Europe can be divided,
- technical barriers,
- Language barriers and
- cultural barriers.
Natural barriers
Within pan-European general cargo traffic, barriers due to time zones are of secondary importance in contrast to physical barriers. Most physical barriers can be overcome by developing and expanding infrastructure. This is particularly evident in the countries of the Visegrád Group, which have significantly improved their infrastructure since 1989, so that the accessibility of central Poland, for example, as measured by the periphery index, is now comparable to that of northern Italy. For the other Central and Eastern European countries, however, the infrastructure still represents a major problem area. Here, the cost barriers are of decisive importance. The international pressure on important strategic connections enables faster implementation, i.e. lower cost barriers, than local projects. But there are also infrastructure problems in the EU. The centralistic structure of France is reflected in the likewise centralistic structure of the roads with only a few connections to neighboring countries.
Artificial barriers
Political and legal barriers
The structure of the network includes the physical configuration and the institutional organizational structure, which also includes franchising. Every physical network covers a geographical area and is thus influenced by local, regional, national or even multinational political and legal factors that affect the design of the nodes and edges. These include the freedom of establishment, the choice of legal forms and the drafting of contracts. While the freedom of establishment is completely given in the EU states, a restriction of the freedom of establishment is discussed, especially if new countries join the EU.
The choice of legal form depends, among other things, on the liability and risk restrictions and the financing options, as well as on the influences of ongoing and one-off taxation. The different tax laws between and in all three political and legal areas alone result in local peculiarities.
When drafting contracts , legal problems arise, especially when drafting European franchise contracts, since there is no uniform franchise law in Europe. Rather, it is a conglomerate of service, work, license and partnership agreements. Only area protection, joint (agreed) prices or bogus self-employment are mentioned here as individual problems. Area protection in particular represents a source of possible intra-organizational, political conflicts between individual cooperation partners. The expansion of the network may also require new area assignments. Some "top dogs" could try to prevent the acceptance of new partners, as this would mean a decrease in volume for them.
Political barriers within the provision of services arise primarily in the transport sub-process. Different rules and regulations in the choice and use of different modes of transport as well as the formal overcoming of political boundaries lead to a multitude of problem areas.
The weights and dimensions for means of transport have been decided by the EU since 1985 and largely implemented. However, these only relate to cross-border traffic and allow national regulations within the framework of the subsidiarity principle. Until 2005, the uniform weight restrictions will also be accepted for transports with Switzerland, so that the weight restriction of 38 tons in Switzerland will no longer have to be taken into account when planning transport flows. However, the choice of the mode of transport will then probably no longer be freely selectable, because since January 7, 1998, the Swiss constitution has laid down the task of moving goods in transit from road to rail by 2004. The compromise negotiated by the EU with Switzerland, which was bought with a sharp increase in fee payments for transport, will then probably become obsolete.
Furthermore, the free choice of carriers is not always given. While there is free competition among freight carriers with the release of cabotage within the EU, transports of individual parts from Germany that are intended for pre-assembly in Poland, for example, are subject to approval and are therefore mostly in German and not Polish hands.
The political and legal regulations have a very strong influence on the planning and design of general cargo transports, which, however, can be calculated and can therefore be planned by the respective operators. Excessive demands on the delivery service by the shipping industry could not be avoided with clear communication of these special barriers, but they could be counteracted. The main political and legal barrier in Eastern European traffic is still the customs barrier, with its two components that are relevant for transport, customs clearance and waiting time. While the actual customs processing for transports to the Visegrád states has become more manageable due to the accession to the convention on cross-border goods traffic on July 1, 1996 and the associated simplified shipping procedure , different definitions, security provisions and pronounced customs formalism prevent rapid clearance to the other countries Eastern Europe. Here in particular there are reports of seemingly adventurous customs clearances; For example, the St. Petersburg customs office was closed at short notice last year because the target number of clearances for the week had already been reached.
In addition to the actual clearance time, which is only around 15 minutes for journeys to the Visegrád states due to the simplified transit procedure, the waiting time at the border is considerably longer. This is mainly due to the fact that there is no separation of the movement of goods (import / transit to the Visegrád countries / CEFTA ) at the border, and thus the temporal advantages of clearance at the dispatch and destination are nullified. It is precisely because of these waiting times that no time guarantees can be given for transports to Eastern Europe, as are customary in Western European transports.
Technical barriers
Technical barriers such as different power grids or track gauges on the railways are less and less important for the implementation of pan-European general cargo transport. On the one hand, the majority of general cargo transport takes place in road haulage, on the other hand, these barriers have largely been overcome through technical innovations. Technical barriers, both in the form of missing or different standards in the European countries in general and in the respective country organizations of the cooperations and groups in particular, are of greater importance. Modern information and communication technologies (ICT) such as online data networks, EDI, mobile and landline communication, identification systems (barcodes, transponders) and location systems (GPS, on-board computers) for transport processing as well as vehicle and shipment tracking are necessary to design efficient general cargo transports. While the infrastructure problems for communication systems in the Visegrád countries have been resolved, at least in the economic centers, there is a lack of adequate communication infrastructure in rural regions and the rest of Eastern Europe. The company-related use of new ICT, especially for shipment tracking, has to be assessed very differently. Tracking & tracing systems are offered online by almost all operators of system-managed general cargo transports. However, no statement can be made about the quality of these systems, especially about the scope and time lag of the messages. It can also be assumed that it is currently not possible to track shipments to Central and Eastern Europe online, as, for example, the largest cooperation for general cargo to Eastern Europe, ILS, does not offer this in contrast to its national and Western European sister companies. Due to the high investments in such systems, the relatively low volume represents a cost barrier that currently does not allow efficient use. When it comes to traffic in Western European regions, the problem lies less in the technical infrastructure than in the proprietary design of the systems in the individual country organizations in the past.
Further technical barriers to efficient handling of general cargo traffic result from the heterogeneity of the goods and the associated difficulties in automating the handling processes. While the integrators can achieve speed and cost advantages through fully automatic handling, the problem with general cargo is the differences in shipment volumes, weights and the corresponding handling and the inefficient use of pallet and vehicle capacities.
Uniform transport containers, which would have to be established on the market as logistic units for piece goods, could increase efficiency. Variable, modular load carriers enable customer-specific compression of general cargo and better handling. Pluggable and collapsible load carriers allow third, half and full pallets to be formed. In modular swap bodies, these are then transported in relation to normal carrier vehicles and can be handled by automatic conveyor systems.
However, technical barriers can also be interpreted in such a way that the organizational process can also be subsumed here. Due to the problem of critical mass, general cargo in low-volume areas is often handled via different gate nodes. While in the Schenker network, for example, the route of the shipment in the network is determined by the postal code of the sender, an individual route is planned for some cooperations. Especially if an additional transport within Germany that is directed against the actual direction of travel has to take place, the transit time can be increased by half a day to one day. If the long-distance traffic is not coordinated with the feeder traffic (since these are transported in a separate inland network and are not identified as feeders), additional “waiting times” for the general cargo are possible.
Language and cultural barriers
The importance of language and cultural barriers are difficult to assess. Different models try to differentiate and operationalize geographical distance and cultural distance through constructs such as cultural distance . Such distances are less pronounced, especially in border regions. For example, the small goods market / general cargo market in Bavaria and Saxony is mainly handled by Czech entrepreneurs with small vans, as there are no language barriers or the savings are greater than the costs of overcoming the barrier ( transaction cost theory ). Often the dialects spoken in border regions are more linguistically related than the languages themselves and cultural differences are not as pronounced. Nevertheless, the cultural difference in Europe should not be neglected.
Summary and development trends
The problem areas of pan-European general cargo transport can be found on three levels. The economic component, which mostly affects the infrastructure and the regulatory framework, will be further defused by the political process of deregulation and harmonization.
The strategic level, the design of networks, depends largely on the number of nodes and edges as well as the volume. Fierce cutthroat competition will greatly reduce the number of providers here. The high market exit barriers, especially of owner-managed, medium-sized companies that do not concentrate on a niche strategy, could result in long-term consolidation of providers and thus continued poor network performance. The creation of joint organizational and operational structures in the decentralized branches of the group forwarding companies and with the local partners of the cooperation represents the actual business challenge. Only those who succeed in significantly increasing their performance and offering pan-European transport services in a system of complex distribution and Integrating procurement processes can compete.
In addition to the obstacles created by communication barriers, the prerequisite for the efficiency of general cargo transport is above all the strong bundling on the part of the network operators, which can only be achieved if a sufficient, critical mass is fed into the system. The vicious circle of supply and demand is particularly evident here. As long as the efficiency on the part of the operator is not noticeably increased, the system will not be used by the senders. On the other hand, shippers who feed their shipments into the system are disappointed by the inadequate performance on some routes.
In order to avoid this problem, the sender often consolidates his shipments himself so that he can deliver them to the market as part loads. With consolidation, additional storage costs or costs that are difficult to allocate due to suboptimal production programs are accepted in favor of a higher efficiency of the transport system. However, bundling is not the economic task of the shipper, but that of the forwarding agent.
Freight exchanges and, in this case, exchanges specializing in general cargo, in particular, can be used as a supplement to existing systems, not as a complete alternative.
Another development trend is the horizontal cooperation between manufacturers in the context of distribution. Under the heading of “cooperative competition”, bundling advantages and synergy effects can be achieved within the framework of procurement or distribution concepts. One example is PharmLog, which has been operating since 1995 and a cooperation between leading pharmaceutical groups in Germany that existed when it was founded.
The logistical service providers and the operators of pan-European general cargo transports are required to develop and offer such concepts themselves, because as a “neutral operator” their advantage here is impartiality.