Impressive growth rates and good business prospects. Thomas Schauer, CEO of freight transport company Gebrüder Weiss, has no reason to complain at the moment. He told The Budapest Times what gives him reason to hope this will remain the case.
Thomas Schauer, CEO of Gebrüder Weiss, said the freight transport company offset a drop in wages for workers on the lower end of the scale that were a result of the tax changes that came into effect at the start of the year. “We couldn’t simply ignore our employees’ expectations, which turned out to be misplaced. After all from the start, the message from the government side was that everyone would earn more thanks to the changes to the tax system,” he said.
How was the first quarter of 2011?
Considerably stronger than the first quarter of 2010. In the interests of full disclosure, however, it should be added that the first quarter of 2010 was a very bad one. It was only from the second quarter of 2010 that the transport sector really picked up again. Throughout 2009 and in the first quarter of 2010 there were large overcapacities of both storage facilities and lorries. That situation has now completely turned on its head. In fact there is now once again a shortage of lorries. We last experienced something similar in 2007 when the economy in Hungary was humming.
So you are already experiencing something of an upturn in the economy?
Yes, certainly. But it is still based very strongly on the optimism of the, for us very important, export industry, which follows the positive order situation on the German market. Exports have already recovered completely. Imports are already halfway towards a sensible level again. Even domestically there is good growth in certain product groups.
Which product groups are generating growth in terms of foreign trade?
Mainly high-tech and automotive. Our most important customers are in those fields. This year we were able to open a tyre warehouse for Continental in Mosonmagyaróvár. Twenty-five employees in the newly built 16,000-square-metre warehouse take care of the transport of tyres to all over Hungary and Austria within 24 hours.
What proportion of your business do industrial goods represent?
Domestically they account for around a third. Consumer goods make up around 70 per cent of the volume that we transport. However, industrial goods make up 80 per cent of our foreign business, so they clearly dominate there. Overall industrial goods are responsible for around 60 per cent of our turnover. That also means that our good business figures are due increasingly to Hungarian domestic consumption, and not solely to the upturn of the German economy.
Is that because domestic consumption has picked up or because you have managed to attract more customers in that field?
Currently we are growing above all because of new customers and innovations. Order volumes from our regular customers have been constant or have even declined in some cases unfortunately.
How do you attract new customers?
There are a lot of companies today that can transport a pallet from A to B. In that respect providers can essentially only compete in price. That’s why we need to offer extra value, such as rare destinations, daily departures for the whole of Europe, particularly high-quality or special products. In terms of destinations, for example, we can offer our seamless organisation in the Balkan region combined with good local customs knowhow. When it comes to quality we score points thanks to our good electronic data-processing system, which allows us to scan goods when they are collected, when they enter and leave storage, and when they are delivered so that customers can use track and trace to see where their freight is at any given time. Only a handful of providers on the market can offer that. In terms of innovation and special products, we have just launched our new product GW pro.line.
What does that consist of?
The product is something new on the transport market. It is a product line with a standardised service offer. The key components include defined door-to-door transit times, daily departures, track and trace, online proof of delivery and monitoring of transit times. We have a map with zones that establishes precisely how long it will take for the freight to be transported. The prices are just as transparent and easy to understand. The new service is targeted at business customers, in particular SMEs, and allows for smaller consignments of 30 kilogrammes and above. It is particularly suitable for cross-border consignments.
What is your network like?
It’s a seamless organisation with uniform systems in all countries where GW has offices. Where we are not present ourselves we have partners of many years that share our high standards. What is new with the pro.line product is that we have divided up the whole of Europe into regions and freight is transported onwards on the day of collection whatever the destination. That happens either directly or via a platform in one of those regions. In this system Hungary, for example, is responsible for Central Europe. There are 15 groupage freight departures daily from our head office in Dunaharaszti direct to neighbouring countries, for which we receive consignments from GW Austria, Switzerland and Germany and other countries.
How important will the new product be in terms of your turnover?
It’s too early to say. We launched the service on 1 March simultaneously in all our European offices. However, there is definitely interest on the part of customers. In any case, regardless of the extent to which GW pro.line will contribute to our turnover, it’s an effective way of improving our relationship with customers. We can now serve customers in areas where previously they had to turn to another service provider. Both sides benefit: it’s more convenient for the customer and we get a little more business. We also have great hopes of GW pro.line in terms of attracting new customers. Our name will become better known and customers who find us through this service may also use us for larger orders.
What is your prognosis for 2011?
We are optimistic and not without reason: we are well on track so far and our turnover is way above our target. Overall we are anticipating a growth in revenue of 10 per cent year-on-year in 2011. What’s nice now is that current impetus is very sustainable and broad-based. There’s plenty going on in all areas of business.
How are you coping with the high fuel prices?
We have to pass the resulting costs onto our customers to a large extent. The increase in price is simply too great. Fuel prices are around 20 per cent over the level in the third quarter of 2010. Luckily on our market since 2007 it is standard to contain a so-called fuel clause. Although that does not guarantee the automatic and full transfer of fuel costs that have increased in the meantime, it does facilitate negotiations with customers on that point. In 2009 at the height of the crisis, when fuel prices fell considerably, customers could also benefit thanks to the more flexible contracts.
How did you react to the surprising drop in net salaries of low-earners as a result of changes to the tax legislation?
Of course we acted straight away and adjusted the wages of affected employees accordingly to offset that effect. Clear communication was also very important to us. We wanted to make it absolutely clear to our staff that the development was related to the tax system, rather than us doing something wrong. We couldn’t simply ignore our employees’ expectations, which turned out to be misplaced. After all from the start, the message from the government side was that everyone would earn more thanks to the changes to the tax system.
There are still considerable overcapacities of warehouses on the market.
Yes, certainly. That pushes prices downwards of course. A lot of companies are struggling with that problem and are forced to press the owners of their storage facilities for more favourable rental conditions in order to remain competitive. For us the problem is not of this nature because we also own our logistics centre in Dunaharaszti. However, sometimes we have to let a deal go if the customer has particularly low price expectations. We prefer to leave a storage space empty than to fill it at a loss. If it is purely a question of storage, then we are not necessarily the right people to contact. We come into our own when customers need a high degree of automation, high-quality standards and value-added logistics.
How satisfied are you with the government’s economic policy?
Apart from the slip-up with the wages I cannot complain. Our industry has not been hit by special government measures, nor have I heard that such a thing is imminent. I hope that the fair behaviour towards our industry will not change. Regarding the toll system for lorries scheduled for 2013 I am hoping that the road-usage charges will be within a normal price framework. To avoid damaging Hungary’s attractiveness as a location they should not be higher than in, say, Slovakia.
