This industry is still struggling with the crisis. "Low rates will decimate smaller companies"

• Frigo is developing its potential , because the demand for frozen product logistics is growing. In general, however, road transport has been suffering from the recession for two years.
• - The crisis, low rates will decimate smaller companies; larger ones will survive, which will then raise prices. Such a sine wave is not good for anyone - says Krzysztof Pawlik, CCO Transport at Frigo Logistics.
• We ask our interviewee about the interest in zero-emission transport. - They are currently much more expensive than standard ones. When customers find out about it, they say: "Okay, we'll hold off for another two or three months, we'll see what time brings," he replies.

Temperature-controlled transport, in which Frigo Logistics specializes, is transport of a higher league?

- It is definitely more demanding than transporting goods under a tarpaulin, both in terms of costs and organization. We primarily transport frozen food, so the units we use must be particularly efficient and set to -25 degrees, due to the fact that our vehicles visit several to a dozen or so unloading points, and each time the cargo space is opened, the cold escapes from the hold, even though special mattresses are used at the unloading points to limit its loss.

Firstly, the semi-trailer itself is much more expensive than a tarpaulin. Its construction is rigid due to the insulating material. Secondly, each must have a generator. In total, the whole thing costs over 100 percent more than a typical tarpaulin, with the cost of the generator accounting for about 1/3 of its value.

New vehicles are more economical to operate

What kind of fleet does Frigo Logistics have today?

- A total of 460 tractor-trailer sets, of which 400 belong to entities cooperating with us and 60 are owned by Frigo Logistics . In the first quarter of this year, 13 Volvo FH 460 tractor units, four Volvo FL chassis, five MAN TGM 18.250 vehicles and 23 Schmitz refrigerated semi-trailers joined our fleet.

The new vehicles are more economical to use, which allows for the optimization of operations. They are already being used in our operational activities. We are also waiting for the collection of the next ordered vehicles.

So Frigo applies the principle popular in Poland, according to which the logistics operator relies on means of transport belonging to subcontractors?

- Yes, we rely on subcontractors, but we do not limit ourselves to them. A few years ago we took over the Armir company to have our own fleet, but also to gain the appropriate know-how.

Does having your own fleet provide security for a logistics company?

- Seasonality is evident in our industry. In difficult periods, we send our cars to places where it is not easy to find a subcontractor and the customer's order requires urgent execution.

Spot rates are falling, but contract rates are not

For two years now, the road transport industry has been complaining that there is a lack of orders due to the economic downturn in Europe. Are subcontractors knocking on your door looking for work?

- Indeed, a large proportion of small transport companies currently have major financial problems due to the fact that the market in Europe has slowed down a bit, and large carriers are looking for anything to transport at any price to at least earn enough to pay for leasing and survive the crisis.

As for our subcontractors, this is a group of about 150 entities, relatively stable. They are both small family businesses, where the owner is a driver and his wife does the accounting, and large enterprises. They have been with us for a dozen or so years. They know what they can count on, that we pay on time, that we divide the work equally, that we do not use transport exchanges. We rather develop cooperation with existing cooperators than look for new ones.

Another thing is that the companies that are currently in the biggest trouble are handling traffic in Europe. It has a different specificity than handling transport on the domestic market, which is what Frigo Logistics does. In international traffic, drivers are used to one loading and one unloading point in one trip, and ours often have five, six, and sometimes even more unloading points on the route. For them, 2-3 weeks on the road is the norm. We don't have that here. And the salaries in international transport are different than in domestic transport.

How does the economic downturn in Europe affect transportation rates in your business?

- When it comes to spot orders, rates are falling, but when it comes to contracts where clients require high quality and great predictability, they are not.

Spot rates are falling today, but there was a time when they were rising sharply during a period when there was a shortage of fleets and drivers. At the peak of the pandemic, there were a lot of transport orders, and it was difficult to buy a new car because there were problems with their production. Now it's the other way around.

I'm afraid that the crisis, low rates will decimate smaller companies ; larger ones will survive, which will then raise prices. From the point of view of the person responsible for organizing transport, it's best when the market is stable, more predictable. Such a sine wave is not good for anyone.

Speaking of the fleet, Wielton, in response to the market situation, but also to the green trend in the economy, opened the ReTrailer company and entered the trailer renovation market.

- We went in a different direction, we refreshed the entire fleet - to make it newer, better looking, more economical. The new trailers have better parameters, including lower thermal transmittance, and as a result - they use less energy. We also ordered new generators, which are more economical.

What’s next for the transformation of drives in road transport?

The European Commission is strongly promoting the electrification of road transport, including heavy goods vehicles. This direction may be subject to verification, but for now it is binding. For temperature-controlled transport, this is a particular challenge, because electricity is needed not only to drive the vehicle, but also to generate cooling. What experience does Frigo Logistics have in this respect?

- We tested many solutions from different manufacturers, both in terms of electric distribution vehicles and electric tractors with a semi-trailer powered 100% by electricity, along with an energy recovery and battery charging system, because in our industry we need to be sure that the semi-trailer will not run out of electricity.

We are monitoring the market. For now, by replacing the fleet, we have improved the parameters of combustion engines. Our vehicles are now much more economical, emitting less CO2 . In future investment plans, we are also including an electric fleet.

The National Fund for Environmental Protection and Water Management has just launched a program to support the purchase or lease of zero-emission heavy-duty vehicles. It is worth PLN 2 billion, but - as Maciej Wroński, president of the employers' organization Transport i Logistyka Polska, calculated - the needs of companies in Poland related to changing the drive to zero-emission are PLN 300 billion over a five-year period.

- Buying a vehicle is one thing. Another is the possibility of charging it with electric energy, not only at home, in a distribution center, but also on the road. A combustion car can be easily refueled if the situation requires it. For now, finding a suitable charger on the road is a problem.

What about LNG and biogas, whose carbon footprint is much smaller because in its case the CO2 circulates in a closed cycle?

- We haven't tested biogas yet. In Poland, it has only recently become available on a wider scale.

Is there any market interest in zero-emission transport services?

- Yes, customers ask about it, but it comes down to costs. We have conducted tests in specific directions and we know that currently zero-emission solutions are much more expensive than standard ones. When customers find out about it, they say: "Okay, we'll wait for two or three months, we'll see what time brings, what these subsidies will be."

How much more expensive is zero-emission transport than standard transport in the current reality?

- There is no single answer. It all depends on the relationship, whether it is a typical distribution or delivering goods around the city. The size of the vehicle also matters.

What do you think about combining rail and road transport? Delivering goods by train to a dry port, and then reloading them onto trucks that will deliver them to the final customer. Is this a real opportunity for logistics or a fantasy?

- In our case, only intermodal transport using refrigerated containers is possible, and there is a shortage of them on the market. Besides, filling a train with them is not that easy. One solution is to load entire refrigerated trailers onto platforms. This is used in Europe.

At Frigo, we have some experience in organizing rail-road transport. We are a partner of a Chinese operator who delivers containers to Katowice by rail once a week. They arrive from China in 16-18 days, which is much faster than by ship. We disassemble the goods and send them on by road to recipients in Poland, but also in the Czech Republic and Slovakia. But it is true that these are not frozen foods, but general cargo goods.