Wallenborn: Road feeder services in demand
08 / 04 / 2021
Only a few months of 2021 have passed, but the year is already showing positive signs for road feeder services (RFS) business Wallenborn.
Looking back on 2020, commercial director Jason Breakwell says volumes from March to December were around 10% higher than in the previous two years. “This year has been similar,” he observes. “If anything, it has been busier than 2020.”
Breakwell says that, as in 2020, the limited bellyhold capacity owing to coronavirus-related travel restrictions means that a lot of freight is being diverted to a smaller number of hubs, especially Amsterdam, Frankfurt, Liege and Luxembourg. This has led to RFS being busier overall as shipments increasingly need to be transported by road over longer distances.
He explains: “One of the things that we have seen in a short period of time is that airlines have had to switch hubs. Perhaps a hub that they have been operating at for many years is just becoming too busy, so they have had to divert to other airports and then have become much more dependent on RFS.”
He adds: “France, Italy, Scandinavia and the UK are markets with limited freighter flights and that’s still the case — they have always been heavily reliant on passenger flights. So for them, Ithink RFS is going to be more important and it has kept them going in some respects.”
Looking at the types of cargo carried, there has been a mixed performance: “There has been an increase in demand for healthcare and perishable products,” Breakwell says.
“Perishable products would normally take a direct flight in the belly of a passenger aircraft, but many of those aircraft are not operating at the moment, so that means direct routes are not always available.”
He adds: “Temperature-sensitive products are being transferred to the road more often than they used to be.”
Also, similarly to last year, volumes of aviation and aerospace equipment are down, which Breakwell says is “not surprising”.
“There’s not as much maintenance being done on aircraft and obviously not so many aircraft are being ordered at the moment. The volumes of parts — especially big parts like engines that used to be flown into Europe in large volumes — have gone down.”
However, Breakwell observes that there have been some changes: “The fourth quarter of last year was very busy [for our business] with new product launches and e-commerce goods. More people are ordering things like games consoles.
“Additionally, recently a lot of testing kits have been arriving from Asia. We are carrying a lot of syringes too, to support vaccine rollout in Europe.”
He adds that Wallenborn is “heavily involved” in the transportation of Covid-19 vaccines — but he can’t provide exact details, having signed non-disclosure agreements.
“The main reason is security,” he explains. “There is increasing concern about vaccines being available on the black market. If they are on the black market, they tend not to have been kept in the right conditions [temperatures], so they are probably not going to work.”
In light of this, Wallenborn has got everything in place to transport vaccines safely.
Breakwell says: “Eight years ago, we invested in the GDP certification, which involved upgrading and investing in hardware, software and training. So we have had eight years to develop the expertise that we need to safely and securely transport life sciences products.
“We are in a good position: we’ve got a 24/7 pharma control tower, we increased our GDP fleet by 20% last year and we’ve also integrated the telemetry on that fleet — which means our customers can get real-time temperature data and updates every five minutes, giving them a lot of confidence in the product.”
Wallenborn responded well to the changes brought about by the coronavirus pandemic, but not long after, another curveball was thrown: the UK’s exit from the European Union.
Breakwell says: “There was concern that there would be disruption at the border and so there was a lot of stockpiling, especially during November and the first half of December. There was extremely high demand coming into the UK — and going out of the UK too. I think a lot of exporters wanted to get their products out because of the uncertainty over tariffs.”
In order to be prepared for Brexit, Wallenborn consulted extensively with its customers. It also hired a handful of new staff to cope with the extra processes and workload.
“We consulted with customers andpartners — companies such as Eurotunnel, the ferry operators, the airport handlers and the ports that our trucks pass through,” says Breakwell.
“We engaged a lot with government agencies, which in general was productive and left us with good contacts at those agencies — such as customs in various European countries, the UK’s Department for Transport because they have introduced new procedures, and health authorities in the UK and across Europe too.
He adds: “We didn’t want to start [preparing] too early for two reasons. First, we didn’t want our customers to get ‘Brexit fatigue’; and second, a lot of information wasn’t announced or made clear until later on.
“We started communicating with customers last summer and we started consulting with them in October. In webinars, we walked them through what we would do and what they needed to do; and with key accounts we had weekly meetings in the two months up until the end of the year.”
Breakwell says the preparation paid off and that, so far, the transition has been relatively smooth for Wallenborn.
However, he notes: “It was perhaps easier for us to prepare than other companies because we were already familiar with some of the processes due to the nature of our business and the services that it provides.”
Additionally, there were a few “minimal” teething problems: “For example, with customs officers and ferry operators having to learn new procedures and sometimes not understanding it,” he says.
Even though Wallenborn was prepared for Brexit, Breakwell says that factors outside its control are causing disruption to its operations.
“Most of the major airports are very congested, so it’s taking a lot longer to get in and out of warehouses at airports,” he explains. “So trucks are obviously spending more time not being productive. That affects driver productivity too.”
He says that Covid tests for drivers and the deep-cleaning of trucks during driver changeovers is also affecting productivity.
“I think that for the next few months, because of the travel restrictions, we will see a continuation of current trends: not so much belly capacity and a lot of scheduled and chartered freighters.”
He adds: “We did advise our customers that even though we are well prepared, there is always a risk that if massive traffic jams were to build up at the ports then we could get stuck in them.”
However, thankfully: “That hasn’t been the case so far, so I think the UK has done quite a good job of managing it upstream; trucks arriving at Dover, for example — or through the Eurotunnel — are ready to cross the border, and the percentage of trucks that are not ready is very small.”
Breakwell also warns that “we’re not through it yet” because some supply chains have been suspended and the full Brexit transition is not yet complete.
“We may see problems in the next few months. Of course, the UK is phasing in the controls, which I think is a very good idea, but it does mean that we won’t know until later whether any problems are structural or teething,” he says.
Breakwell adds that, since Brexit, Wallenborn has seen an increase in volumes — “and we perhaps picked up some new business because not all transport companies were ready”.
Yet on the downside, the new procedures are “burdensome”.
“For a typical truck movement there are now between six and 12 additional procedures. If we have perishable cargo on board, then there are more requirements. “It takes up time and that’s why we needed to add extra people to our team – to make sure that the processes can be done on a 24/7 basis.”
He adds: “It’s not what we are used to; trends in transportation have been about simplifying and streamlining. The new processes go against that.”
The road ahead
Breakwell says RFS businesses are now at a critical point in forecasting — which is “problematic” because current circumstances make it “difficult to forecast beyond next month at the moment”.
So how can Wallenborn keep on top of the market? Breakwell says the business is “flying by sight”.
“In other words, we can’t look down — we have to keep looking up to see what’s coming, because things keep changing and we have to really be tuned into the markets. We have to think about what our customers could need next and we have to make sure that we are ready to adapt.”
He reckons that the current capacity squeeze will continue “at least until summer and beyond”.
“Obviously airfreight capacity is in very high demand — and the RFS sector is also experiencing very high demand. If you look at the capacity index, it’s definitely going down and the pricing index is going up,” he says.
Something else that’s unpredictable is market rates, he adds.
“We obviously saw a flurry of aircraft being used as freighters [at the onset of the pandemic], and that’s still going on to some extent, but not so much now because yield has come down on many routes.
“So at the moment, we are seeing more freighter charters, but this could change at short notice. I think most companies are looking at the way that they manage their stock.”
In light of this, Wallenborn has a hybrid operational model in place that enables it to respond to changes in demand. Breakwell says: “The core capacity that we supply is our own fleet, which is between 80% to 90% of our capacity, but we work with a lot of qualified contractors as well, depending on demand and the season. So around 10% of our available capacity is provided by third parties.”
The company is also in the final implementation stage of its new transport management system, which will help it to streamline and automate processes such as status alerts — including shipment temperature updates — giving members of staff more time to focus on other tasks.
Considering the disruptions seen in the past 12 months Breakwell says a positive outcome is that Wallenborn has proved its ability to adapt.
“Until that point, we always thought we could,” he says, “but we had never been tested.”