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Romania’s growth is supported by consumption

Romania’s growth is supported by consumption

MCR Interview: Catalin Putineanu, Managing Director, IB Cargo

Q: What did 2017 mean, in terms of development, for IB Cargo and what were the main engines of growth?

 

Catalin Putineanu: IB Cargo had a very good first half of 2017 with a year-on-year growth of over 21%. The main drivers for the growth were the increase of export volumes for both our existing customers and new ones. The increase of internal consumption has obviously had a significant influence on the volumes we managed to handle this year.

The diversity of our customer base and the variety of the industries we serve have put us on a healthy growth curve. We have had the great opportunity to prove our capabilities of bringing value to the supply chain activities of our customers from small and medium size enterprises to large multinational companies from automotive, FMCG, pharma, chemicals sectors.

 

Q: How did IB Cargo benefit from the economic growth for 2017, which is supposed to be between 4% to 6%? How does a 1% growth in the Romanian economy influence the growth of IB Cargo (also in percentage points), by reference to the past five years?

 

Catalin Putineanu: Considering the size of our company, the average GDP increase is not directly related to our performance. We have seized opportunities in the market and have managed to keep growing in the past years.

 

Our expectation is to close 2017 with 22 to 24 % over the previous year.

 

The average yearly growth for the past five years stands at 21%, so if our expectation for 2017 will be met we’ll be on that healthy growth curve.

 

Q: Companies like yours are able to give more important signals for the future trend of the economy, having in mind your activity of internal and over the border transportation. What do you see for 2018 and beyond, in terms of growth, limits of development, and the quality of the products you are exporting?

 

Catalin Putineanu: The growth of the company and logistics market was supported by exports last year, on road and sea, especially to the Middle East and the Far East, predominently of gas and oil equipment, as well as of other products such as FMCG, automotive, and textile to the Americas and Asia.

 

For this year and the next one, we estimate that the increase will come from the industrial production - export of finished goods and imports of parts and raw materials. We will continue to focus on increasing exports in all segments of transportation: sea, air and road.

 

Q: In terms of clients, what was harder for you: to keep the existing clients or to attract new ones? How did the crisis and the new growth cycle change the criteria by which clients choose their services supplier?

 

Catalin Putineanu: It is important to understand and adapt to the needs of each client and not just to provide standard solutions. There is a need for indigenous people, trained to know how to combine all transport segments, from standard to time critical type, in order to deliver a cargo to the client’s door on time and in his budget.

 

We offer increasingly large “one stop shop” freight forwarding solutions: road, air and sea, time critical to air and road, customs service, consolidation of the acquisitions from multiple suppliers, all these operations helping the organizations to optimize businesses, to be in compliance with the latest legal regulations, to recover from critical situations and to better use their own abilities.

 

By outsourcing to us the logistics part, the clients can concentrate on what they know better, depending on their type of activity. It is very important, as a client, to choose the logistics partner carefully. Depending on the connections and partnerships it has, how it is connected to the market, it can or cannot add value to the business.

 

 

 

A big challenge for our customers is the time critical service that we successfully carry out on air and road. Automotive companies need such services in particular, as stopping production for any reason (lack of stock, damages) results in the loss of tens, even hundreds of thousands of euros a day. To give you an example of the reaction time in this field, on board courier - is an air freight service, available 24 hours, door to door. In 30 minutes we give the quote, the cargo is taken over by one of our agents, who departs with it with the immediate availability of passengers. A recent example: Chicago-Brasov, 22 hours on a weekend. Last year we had daily, even several times a day such shipments for automotive companies and we successfully managed to help them honor their customers’ contracts.

 

  

Q: Since you offer road, sea and air transportation services, which field was the most dynamic and why?  

 

Catalin Putineanu: Increases were registered in all segments of services that we offer, but compared to the previous year, the first semester of this year has brought growth for international road transport, sea full container load and sea less than a container load. Maritime transport has continued to grow because we focused on exports and road transport often comes as support for sea and air, increasing in line with them.

 

For shipping, the market is unstable in terms of rates and it is very important to have the right partners in each commercial destination, so you can offer customers what they need.

 

We offer time critical services for air transport: on board courier (an agent picks up the cargo from the customer, up to 300 kg, and board it with the first passenger flight available, while documentation and customs are being made in emergency) and charters (single customer cargo on a dedicated airplane) and for road transport: dedicated vans, with 2 drivers.

 

Q: Romania is heading towards an economic growth anywhere in between 4% and 6% in 2017. Looking back to the previous 5 years, what is the correlation between the growth of freight transportation and economic growth? In your view, where is the economic growth coming from in 2017 and 2018?

 

Catalin Putineanu: The freight forwarding sector development is supported by all manufacturing industries and by the increasing consumption.

In 2015 Romania had an economic growth of 3.7%.

The evolution of consumption has increased, as has the need for logistics and industrial spaces and services for deliveries to import and export.

In 2016, the advancement of the country’s economy continued. The reduction of VAT quota has boosted consumption, exports have reached 54.6 billion euros, while imports went up to 63 billion euros, the most important share being represented by cars and equipment.

The automotive industry has attracted investments in automotive parts factories, in transport companies, fleets and warehouses over the years.

All of this has led to the increase of the transport and logistics sector.

In 2017 and 2018 Romania’s growth is supported by consumption, therefore in the freight forwarding sector there are estimated increases.

 

 

Q: What are the prospects and desires of IB Cargo for 2018?

 

Catalin Putineanu: Both this year and the next, we will focus on keeping our current customers satisfied. From an external point of view, we will focus on exports, on complex special projects for oversized transports, on the automotive industry and we will keep customizing our solutions based on the customer’s needs.

 

  

Q: What’s your view on employment, trade and investment in your field of activity for 2018?  

 

Catalin Putineanu: As we have mentioned above, the development of the freight forwarding sector is supported by all manufacturing industries and increasing consumption. The growth of exports and imports attracts the need for transport and logistic services.

 

The automotive industry, FMCG, manufacturing industry, on-line commerce are important users of freight forwarding services. Retailers are looking to develop sales channels, which will lead to an increase of new warehouses and distribution spaces, as FMCG products have a low storage life and the stocks are running often.

 

Q: Five years after the previous financial crisis, can you state a lost lesson and a learnt lesson of the financial crisis?

 

Catalin Putineanu: Unexpected situations can occur at any time, in any industry, and it is important in these times to find suitable solutions. Thus, flexibility and availability to create customized solutions are two very important qualities that can be found at IB Cargo professionals.

Authors

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I.B. CARGO SRL