There are plenty of challenges in the logistics sector. But, it offers opportunities too. That is according to Jochen Borremans, Managing Director of Bingo Trans, a Belgian company focused on the logistical handling and transporting BelOrta's fruit and vegetables. He says there is a particular demand for services that unburden customers.
A service on which Bingo Trans is increasingly focused. Flexibility plays a major role in this, says the manager. "Responding quickly and flexibly to current demand is vital. We're located at the [BelOrta] cooperative, so we can switch quite quickly. It takes a lot of time for outside companies to send someone here," Jochen begins.
At their customer's request, Bingo Trans can arrange complete logistical handling. "That may involve order picking, preparing pallets for export, or checking their auction purchases. For foreign traders, we can do loading and create the necessary CMRs." Price is playing a noticeably more important role, especially with exports to southern Europe.
"Now those countries will only fill shortages of, say, tomatoes if the product is cheap. Before, that shortage would play the leading role," Jochen says. Besides logistics handling, Bingo Trans focuses on domestic fruit and vegetable groupage transport from BelOrta. "This work also continues. Apart from the cost increases, the geopolitical tensions have little effect on the domestic market."
Hard to estimate costs
But, it is not business as usual, he says. Jochen says costs are currently so volatile that even with weekly adjusted rates, it is not always possible to estimate costs. "A surcharge partly covers the rising fuel prices. However, sometimes, the prices fluctuate so quickly that you can't make ends meet, even with a weekly surcharge. The differences are too great," he explains.
Bingo Trans has chosen to adjust prices every week because it is not administratively feasible to do so every day. "Since war broke out in Ukraine, there have been times when diesel prices changed three times a week. Then sometimes you have to pass that increase along." He mentions the prices of all peripheral goods, which have also risen sharply, too.
Borremans says that since the 12% price increase Bingo Trans implemented in January - based on the cost structure at the time - tire prices, for example, have already risen three times. He adds that the sector faces significant challenges and wonders if the situation will stabilize downward or worsen? "We don't know what to expect," Jochen says.
Cost price and capacity
Airfreight is one of Bingo Trans' focal points for logistical handling. An activity that, according to Jochen, looked promising a few years ago. "There was certainly growth, albeit not rapid. However, during the pandemic, the air transport of fruit and vegetables completely collapsed. Just when things began recovering, the Russia/Ukraine tensions began, and everything disintegrated again." He attributes that downfall to the rising cost of air freight.
However, air cargo volumes have not yet returned to pre-COVID levels. "Prices are skyrocketing because of cost prices, surcharges, and kerosene, and there's a lack of capacity. So, customers have to make trade-offs. When air transport is delayed, there's a demand for additional storage of fresh fruit and vegetables, which isn't always available. Combined with the high prices, the question then remains whether those products are still profitable."
Jochen says the air freight situation remains tough because you can no longer do things like give clients the correct flight information. "Say a customer provides everything for departure on Saturday, but that cargo only leaves on Tuesday. Then that product is already three days old; by the time it reaches its destination, it's more than a week old. In terms of shelf life, that doesn't work for fruit and vegetables." He says this uncertainty is causing some end customers to give up.
They seek products from different origins. Others adjust to these changes to keep their customers. Whatever the case, Bingo Trans cannot help but notice that fewer fruit and vegetables are being flown in, affecting their handling. Bingo Trans is, thus, fortunate to have several activities within the company. "We do logistics as well as transport. That lets us move people and capacity from one branch to another as needed, which improves flexibility," Jochen concludes.