Step change in profitability and sustainability for van Huët Glass Logistics can be made with powerful IT tools

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Europe forces transport companies to professionalise and become European
The European road transport business has been revolutionised in recent years. It may still be characterized by a large number of small- and medium-sized companies scattered across the continent, yet the European transport business has evolved from a nationally regulated sector into a highly competitive European market and, consequently, more level playing field. The transport sector made a step change in profitability and sustainability, triggered by a mature European internal market, deregulation and European non-discriminatory legislation. Competitiveness has been heightened by the entry of a large number of Eastern European countries into the European Union. This article decribes the main challenges, successful ways to react to this and a business case.

The eastern European countries have much lower labour costs than those in the West. This has resulted in:

• an increasing number of European transport companies covering a large geographical area
• the offshoring of international transport to low-cost labour countries
• an increasing distinction between international trucking and final distribution to shops and consumers; the latter requiring high performance levels and local language skills from drivers
• a first wave of investments to better plan and monitor transport fleets and drivers

At the demand site, shippers have increased their buying power and in many markets concentration and centralization has resulted in a buyer’s market for transport.

Crisis increases pressure on transport companies to improveThe recent financial and economic crisis has hit profits hard in European road transport. Transport rates in most markets have dropped by more than 20%. Banks are monitoring closely the financial ratios of a large number of companies, forcing them to downscale and restructure to survive. The shift to Eastern European players has intensified; these companies are now offering transport rates as low as 80 cents a kilometre. At the same time, political pressure on road transporters has increased to such an extent that the industry has to improve drastically in terms of sustainability, labour conditions and customer satisfaction. Successful transport companies refocus and invest in operational excellenceIn order to survive and make a decent profit, Western European transport companies need to perform better than their new low-cost competitors. They also need to distinguish themselves by providing added value to their customers. Key success factors are:

• Deciding on the core business. Choose between a performance driven (distribution) company and an international low-cost trucking company. Increase the scale of the company to benefit from buying power and network densities
• Innovating to realize a productivity step-change. Good examples are the 2WIN@ double deck trailers of Emons Cargo, the 45” curtain trailer swap-bodies for intermodal transport and the VTG multi-box for intermodal bulk transport
• Developing a pool of motivated and trained drivers in Eastern Europe to take advantage of wages that are up to three times less expensive than the West
• Focusing on operational excellence and continuous improvement such as improving productivity of assets and drivers, reducing fuel utilization and increasing the skills and competences of the planning department
• Investing heavily in ICT systems. A powerful ICT system is the only way to monitor and plan a large fleet of trucks and drivers

The following case study demonstrates the added value of a smooth functioning and intelligent ICT system for an international transport company.

Go to the Max: Van Huët Glass Logistics combines efficiency with sustainability
Van Huët Glass Logistics (www.vanhuet.com) is a leading glass logistics company and a division of the international Emons Group. It operates a large fleet of dedicated trucks all over Europe. The company has developed a number of significant innovations in float glass transport such as the “Logiglass” for glass distribution and, more recently, the “Maxi-trailer”. Van Huët wanted to increase the productivity of its fleet and improve sustainability by reducing the empty kilometres of its inloader fleet. Gwynt helped Van Huët to identify and calculate efficiency improvements and implement organizational and ICT changes to secure these improvements in practice.

There are multiple ways to improve the asset and driver utilization of transport companies:

• Increase the utilization rate of trucks and trailers by matching orders with available trucks and reducing empty kilometres between shipments (equipment usage)
• Improve the productive and driving hours of drivers  (driver usage)
• Increase the productivity of equipment (maximize hours and kilometres)

A number of analyses showed that focusing on the utilization rate would bring the greatest benefits. Therefore, efforts focused initially on utilization rate improvement. This not only improves efficiency but also reduces the environmental burden as empty running is reduced.

A number of measures were put in place:

• The transport planning unit was centralised, making it possible to combine the nearest truck to a shipment at the different loading plants, while keeping customer service and driver contacts with the local subsidiaries
• The SPITS transport planning was improved and integrated with the TRANSICS board computer systems, making visible the available capacities (trucks-trailers-driver availability) when fulfilling transport orders
• Local subsidiaries focused more on monitoring data accuracy, thereby providing the planning department with correct and real-time information

IT tools and organization were put in place within six months time, without any service disruptions to customers. Since then, the truck utilization factor has increased, despite the continuing difficulties in the business environment.

The next frontier: increasing productivity and driving hours
The European 48-hour working week for truck drivers has forced transport companies to pay more attention to labour productivity. As a second step, Van Huët is now working on increasing driving time. So far, the following actions have been taken:

• Key-performance-indicators have been introduced and implemented at different levels to maximize the driving time of individual and groups of drivers
• Fleet managers have been given training and support to manage their drivers on a continuous basis, looking at aspects like route selection, fuel consumption, driving behaviour and board computer input discipline
• Board computer and transport management systems have been integrated further to provide planning with real-time, accurate data on resource availability

In the future, transport planners will have access to even more intelligent systems that are based on algorithms, planning options and proposals. Constraints like available working hours and loading times will be included in the planning tool, supporting companies in not only competing on labour costs but also on productivity and delivery performance.