German transport logistics in transition: an assessment by an experienced transport buyer that should not always be taken very seriously

Most fairy tales start with the phrase "Once upon a time" and apparently this phrase also fits the current situation on the German transport market. This article specifically examines the large number of shippers in the areas of groupage, part loads and full loads.

Oh how fondly one remembers the “good old days” as a shipper! You could

• if sales or margins fell, or if external consultants thought that the company's freight costs were far too high, a transport tender would be made quickly... and up until a few years ago this was extremely successful, because in most cases one was found Forwarder who placed cheaper offers. So you could quickly save costs in the 2-digit percentage range through a few calls
• use the driver as a cheap or free loader and unloader to keep these costs away from his own payroll. How often do you hear the famous “magic phrase”: “if we have to load it, it will unfortunately take a few hours, but you are welcome to load the truck yourself; then they'll be back from the farm in no more than 30 minutes". A dispatcher trained in business administration then thought that x-hours of waiting time would mess up his entire scheduling and ultimately cost more than instructing the driver to load himself....the thought here was then "time is cash, time is money"
• often hold a freight forwarder liable if the recipient (and here the trade was and is far ahead) received a much overpriced invoice for missing a delivery time window, although the general terms and conditions of the freight forwarding world (they are called - I think - ADSP) one did not provide for such assumption of costs as a matter of principle
• In order to have as little work as possible themselves, "technically underdeveloped" freight forwarders were nevertheless asked to no longer deliver invoice attachments as hard copies, but "bite-sized" in a system-technically controllable format, or one even went a step further by having the freight forwarders imposed a "freight credit system" in order to shift the obligation to check from the shipper to the carrier
• an exchange of loading aids in "handover quality" was agreed with the forwarders; knowing full well that the forwarding agent often received pallets of poorer quality back from recipients

Oh yes, those were the great times of the "buyers' market"! But what happened suddenly and unexpectedly that these times are now over?

First of all, politicians wanted to change the framework conditions ecologically; sometimes inland shipping was the lifeline; sometimes it was the rail. However, the problem of these modes of transport in national business was – and is – that the majority of the recipients have neither a rail connection nor their own port... what a pity. After the market for "cheap" forwarders (first it was Benelux forwarders who flooded the German market at low prices, and then forwarders from many Eastern European countries) had "grazed" from abroad, the situation for shippers slowed down closely.

When there were also negative influences driven by the pandemic (e.g. global supply chain disruptions), extremely increasing energy shortages (e.g. due to the Ukraine crisis) and a problem of young talent on the driver market that threatened the existence of the company (e.g. due to the discontinuation of the Bundeswehr as a reliable training company for drivers), the situation became even tighter .

From the "made in bacon" shippers suddenly became "elephants in the desert" with no realistic prospect of eating and drinking and for the forwarding agents the chance suddenly arose, but was expected, to sustainably improve the extremely low margins of the last years and decades, because, for example, one was one of the systemically important sectors due to the pandemic; The toilet paper had to come from somewhere at the beginning of 2020.

But what are the former "top cost savers" in industry and trade doing now?

Well, they must slowly understand that the former buyer's market is now permanently changing into a seller's market. This is shown not least by the current demands of the forwarders when setting the new conditions, where many shippers first had to swallow hard when high 1 - 2-digit percentage points were then put on the table by the forwarders as a basis for negotiation....and that although within the budget the shipper, as actually every year before, cost savings in the transport area were budgeted. Unfortunately, the core task of transport buyers shifted from "Cost - Saving" to "Cost - Avoidance" .... and avoidance unfortunately often means that you are no longer really sitting in the driver's seat.

For me, however, this phase is also finite and, in perspective, finally creates the basis for a goal-oriented interaction with each other. Ultimately, the current obstacles are forcing everyone involved to rethink. From now on at the latest, the following points should come to the fore:

• joint reduction of empty kilometers in the transport sector. In 2020, the German transport industry covered around 6.6 billion empty kilometers, which according to the current cost structure means around €10 billion in cost savings potential for the transport chain and the maximum reduction of which will certainly also promote the achievement of one or the other climate goal.
• Which shipper or recipient would not want the same transparency in the areas under consideration that we as private individuals or business people are already offered in the CEP area, i.e. when I place an order I receive a link from the supplier with a tracking number to the service provider used and from that moment on I can track the status of a shipment in "real time".
• Increased consolidation of shipments, e.g. through targeted source or destination area bundling (background....do several forwarders really have to deliver groupage goods or part loads to the respective recipient independently of each other every day and is it really necessary to drive every single CEP service provider past their front door every day sees ?)
• In metropolitan areas, the topic of "city logistics" is resumed, albeit as a 2.0 solution. Wouldn't it be nice and worthwhile to have only one delivery from suppliers from different regions once a day at a scheduled date (e.g. by delivering the main runs as cross-docking and delivery by just one service provider)

Of course, some rethinking is still required from all those involved in the process, but ultimately this assessment already shows that - even if all the positive and negative aspects mentioned, as well as the new and old ideas are only examples and do not claim to be complete - there are enough opportunities with a little less selfishness and a little more foresight of the overall economic situation, to achieve sustainable optimizations and not necessarily at the expense of costs.

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The partners of Bavaria Consulting have more than 20 years of project experience in the area of ​​supply chain management - purchasing, production / technology and logistics.

Our expertise is cross-industry - food, beverage and pharmaceuticals.