News Sheet Transport: Mental turnaround in Romania

Neele-Vat opened an office in Oradea, Romania, six months ago. Director Peter Vinke looks back.

Neele-Vat operates in the Benelux, Germany, Switzerland, England, Ireland, France, and various Southern European countries. According to Director Peter Vinke, “in the current economic climate, it is unrealistic to expect to achieve strong organic growth there.” The traditional markets have stabilized. Growth amounts to a maximum of 5% per year, depending on economic conditions and the specific region. Four and a half years ago, we cautiously began exploring Eastern Europe. Initially, the focus was on Poland and the Czech Republic. That was a great success; we’ve generated a lot of business there and are still growing in these markets, with growth of more than 30% per year.”

We now have excellent partnerships with local agents in Poland and the Czech Republic, as well as a network of reputable and reliable carriers. This has led to the opening of a small office of our own in Moscow. We view the further expansion of our Eastern European operations as an absolute priority in our strategy for the coming years. We currently report Eastern European revenue of approximately 10 million euros per year, but that could easily grow to 30 million per year.

Key Focus Areas

Neele-Vat wanted to expand its network in Eastern Europe a step further, toward the Balkan region. The company came into contact with Paul Rovers, a Dutch logistics manager who was well-seasoned in the Romanian market and eager to return to Romania. “We formulated three key priorities. Two of them have already been achieved. First, establishing a transport service between Western Europe and Romania. We now offer daily departures to Romania for groupage, LTL, and full-truckload transport. The second priority was establishing a network of charter services with Romanian drivers. These charter services operate throughout Europe on behalf of Neele-Vat , focusing on long-haul and cross-border transport. The next step, which we’ll take later this year, is to deploy our own fleet and drivers, who will also handle long-haul and cross-border transport.”

According to Vinke, the use of Eastern European drivers is necessary. “I expect a driver shortage in the Netherlands in the long term. That is guaranteed to lead to capacity problems. There is virtually no influx of young drivers here. I wanted to secure our capacity for long-haul routes in Europe. Furthermore, with Dutch wages, it’s impossible to win an international tender. Operating a Romanian truck is about 30% cheaper. We’re also seeing our customers shift their production from Western Europe to Eastern Europe. At the same time, shipments from our existing Dutch clients to Eastern European destinations are on the rise. The ton-kilometer ratio is increasing. Furthermore, Romania has been a member of the EU since 2007, which continues to give the country a boost. I expect to see significant growth in Eastern Europe.”

Mindset Shift

Setting up an office in Romania turned out to be much easier for Vinke than expected. “Of course, you have to go through a lot of red tape before you get all the permits. But make no mistake about the kind of red tape we constantly have to deal with in the Netherlands. In Romania, I met many enthusiastic people who are eager to work with companies that want to invest in their country. We did, however, run into the need for a shift in mindset. In the beginning, we really had to impose our Western standards on the dispatchers and drivers. For example, our Dutch drivers are used to calling the dispatchers after just thirty minutes of waiting. The Romanian drivers didn’t do that until after five hours. The same applies to delays along the way. The Romanian drivers didn’t let us know they were delayed; they would simply show up at the customer’s location three or four hours later without any notice. We had to take decisive action to address that.

The same applies to invoicing. Given the modest margins in the transportation business, we want financial matters to be handled correctly the first time and all at once. That awareness, along with the necessary financial knowledge and expertise, was lacking among the Romanian staff. But things are going well now. The people are working hard and want to move forward. We do believe it’s necessary to have a Western manager on site to coach the office staff, to audit the charter companies (checking the quality of vehicles, documentation, and both ADR and CMR insurance), and to hire the right staff.’

Warehouse space in Romania

Currently, Neele-Vat employs five people in Romania and operates thirty-five trucks on a charter basis. The next step is to recruit in-house drivers, followed by the establishment of a proprietary distribution center. “We’re still renting the storage space we need. You have to stand up before you can walk, and only then can you learn to run. But things are going well now that we’re physically there. For example, there are significant flows back and forth between Romania and Bulgaria, and between Romania and Italy. From the Netherlands, we had no control over that, but now that we’re there, we can have a say in those flows and generate additional revenue.”