Doing business has remained quite problematic in the first couple of months of the year for freight forwarders. CIS-focused specialist, Ahlers found more obstacles piled up on top of the persisting Covid issues with the recent geopolitical struggles putting the operational execution under more pressure than usual. However, the company has seen the number of projects grow in 2021 and the trend is set to continue in 2022 as it adapted to the change.
“The aftermath of Covid still applies,” Jeroen de Ryck, Global Business Unit Director / Projects & Machinery at Ahlers said. “Prices are remaining high, border crossing delays, space and equipment availability, are all issues that remain,” he said.
“When it comes to capacities and rates, I must say that the situation has not gotten any better the last three to six months,” Key Account and Project Logistics Manager at Ahlers, Marko Buneta said.
Russia-Ukraine tensions, along with EU-Belarus border restrictions have put additional pressure on operations on top of the persisting capacity crunch and the rise in fuel prices. This severely affects the ability to provide any sort of long(er) term prices to customers that are currently budgeting for projects that will be executed two or three years down the line.
“Currently it is mission impossible,” Buneta said, adding that the prices offered to Ahlers by its subcontractors today will have a validity of maximum one week. Sometimes not even that long, when talking about spot trucking requests from EU to CIS.
“The rates that you have quoted two weeks or two months ago will not be valid or accurate anymore. Furthermore for the projects that our customers are executing now, they already made plans and budgets for these projects two to three years ago when the world was completely different. Naturally, they are now struggling as the prices are sometimes five to ten times higher compared to when they made the budget,” he said.
However, there is a positive side to this price hike as clients budgeting for projects two-three years in the future are basing their calculations on today’s extremely high prices, and in normal circumstances, it should be quite safe to expect prices to drop, says Buneta.
Other remaining issues were long waiting times at the border crossings and a general shortage of drivers on certain lanes.
Border crossings have posed a specific challenge for the company, not only from China to Kazakhstan and into Russia but also from Europe into Russia. While waiting times at the borders were previously ranging between a couple of days to a maximum of two weeks, these can now last for up to a couple of months, especially when it comes to oversized machinery.
Further complications are caused by driver shortages due to Covid infections/quarantine regulations or simply demand being much higher compared to supply. Mixed with the border closures and restrictions, this drove prices up, and a trend that can be observed currently is that the trucking prices are continuing to rise. Traditionally, trucking prices from Europe towards CIS would drop significantly in January from the end-of-the-year peaks. However, the start of 2022 saw an opposite trend.
“This is going to continue throughout the year to some extent. There is likely going to be improvement later, but this will depend on China’s Covid policies where a minor spike in covid cases can shut down exports and cause another backlog like it has been over the past couple of years,” Buneta stressed.
Ahlers chartering more than ever
Trucking delays have forced the company to dig deep into its toolbox, leveraging the expertise of its chartering desk to provide tailor made solutions to its customers. With the waiting times on the borders and restrictions related to land transport, Ahlers turned to shipping options and has been chartering vessels more than ever.
“I think if you have the right solution, you can still make a difference. That is something that we have seen, especially in the last three months, where we could really offer to our clients, through good relationships and our chartering desk, a solution that they were not able to find through regular lines,” De Ryck said.
Ahlers’ chartering desk made good use of local connections in China to always find a vessel suitable for the job, and despite extremely high rates, the company managed to remain competitive.
“I’m extremely proud of the team by overcoming these challenges, being able to offer our clients alternative solutions and always willing to help and serve wherever possible. Our clients feel that we are going the extra mile. This actually resulted in an increase of projects handled in 2021 and a promising pipeline in 2022.“ says Jeroen De Ryck, Global Business Unit Director, Projects and Machinery at Ahlers.
Adapting to the change and providing the right solutions to meet the needs of its customers enabled the company to grow and is currently looking into expanding in other industries within the CIS, including oil and gas, metallurgical and petrochemical industries.