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Everybody assumes that the current extraordinary situation will, sooner, or later, blow over and business including transport will once again find its usual rhythm. What are the overall forces affecting 21^st century transport, what trends can we see in the industry and how they might be impacted by the current situation? We talk to Ing. Petr Kozel about this and much more.

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What technological trends do you expect to emerge in the transport industry in the near future? Are there any technologies that, in your opinion, will take over the business in a more distant future? 

Land transport is still the most widely used form of good transportation in Europe. Growing demand and ever increasing requirements in terms of high-quality shopping have for many years put significant pressure on seamless and quick deliveries. Many trends have been widely discussed, usually in the context of environment protection and traffic collapse in city centres. Criticisms of diesel delivery vehicles and gigantic investments in electric mobility have become political arguments.

Despite intense debates in the media, alternative drive technologies for long-distance freight, be they electrical, hydrogen or fuel-cell vehicles, are still in very early stages of development and large-scale deployment of trucks with alternative engines cannot be expected any time soon.

The only viable solution for environment protection and alleviation of congested cities lies in optimisation of conventional transport. Although transport companies and their customers have been working on transport optimisation for many years, there is still a lot of room for improvement. I expect growing pressure to consolidate goods and use the full capacity of vehicles as well as increased precision of arrival for loading and unloading. I think companies will more extensively use swap bodies and mega trailers and, if EU-level laws are adequately amended, they will be able to use gigaliners even for cross-border freight. In the very near future, we will definitely see big logistic and transport companies expand their use of GPS monitoring of transport units.

In the medium-term, if technology and legislation manage to find a reasonable middle ground, we might see the dawns of platooning.

What is your opinion on pressure to move freight from roads to trains? Where it the biggest pressure coming from (European Union, public, green activities, etc.)?

There are virtually no links in the entire supply chain that would not support a greater use of railways, at least in theory. In practice, however, rail freight has been going down and reasonable customers do not even ask for this alternative. Requirements on faster delivery times are simply in favour of truck rather than train transport. A fundamental prerequisite for a more massive use of rail transport is a sufficiently dense network of trans-shipment stations and high-speed railway routes. This would require huge investments and since isolated solutions make no sense in the European context such a project would exceed the borders of a single country. Rail freight does not have much future without a back bone network including efficient and fast end-point reloading of goods with technologies for loading on trailers and swap bodies that can continue on the last-mile road stretch. Given the fast turnover of Czech Transport Ministers, there hasn’t been much progress as this segment of logistics requires a continuous, long-term collaboration between the state and transport/logistics companies. So no, I do not feel a lot of pressure to use the railways.

In your opinion, how will the coronavirus crisis impact the transport market?

As COVID-19 is not likely to leave Europe any time soon, so certain of the measures are here to stay, too. The strongest medium-term effect will be weaker consumer demand. Despite all measures to maintain employment rates adopted up to date and billions invested in boosting sales, I still believe that that sales will drop, primarily for two reasons. Firstly, many consumers are starting to realize that they need a financial buffer to weather difficult times like this (this sort of pressure may also lead to deflation) and secondly, movement across Europe will remain limited.

Of course, some companies will see a dramatic growth, for example those providing logistics for e-shops but the whole industry overall will decline. If I can make a prediction, I would guess that revenues from land transport will drop by 5-10% this year. Such a huge drop can lead to serious consequences because many Czech transport companies have no financial reserves whatsoever and some of them will try to compete through lower prices rather than through higher quality.

Furthermore, there is one crucial long-term risk. Eventually, somebody will have to pay for today’s generous handouts. While our governments maintained a budget deficit during rich times, at least there was no pressure to increase taxes. In the future, many cabinets might be tempted to increase taxes as a simple solution to budget balancing and transport companies would be an easy target. Highway tolls, road taxes, excise tax on diesel and VAT – all bring a quick buck for the state. Transport companies find it difficult to reflect these taxes in their prices, so the result is further reduction in their already small margins and cash flow issues. If the Czech state decides to take this approach, it would only benefit foreign competitors from countries further to the east. As a consequence, the transport market could become completely dependent on foreign companies and the smallest shock (maybe in the form of a new crisis) could totally paralyse the Czech market.

Can companies in your line of business actually prepare for unexpected events such as pandemics, natural disasters, civil unrest, etc.?

There are two factors – the probability of an event occurring and the cost of preparing for it, which should not interfere with the company’s financial results too much. Each company should, therefore, use common sense and “shopkeeper” calculation in its decision-making and define simple principles of sustainability. These principles must include protection of the environment, long-term relationship with customers and employees and, above all, responsible financial management – including a financial reserve to cover 3-6 months of lower revenues. After all, computer viruses are a common feature of our life, too. You cannot prepare for them in advance and firewall software will always only play catch-up. Each pandemic and natural disaster is unique and you cannot reasonably prepare for them ahead of time – but strong and confident companies that can act with certain flexibility will be able to make it through.

VCHD Cargo realizes a large part of its business through regular lines. There are currently almost 80 direct lines from the Czech Republic to 14 countries. Despite the current complicated situation in Europe, a new line between Erfurt and Rotterdam started at the beginning of April.

VCHD Cargo ensures regular lines for both export and import. For the most part, the transports are carried out in double-deck swap bodies. “The swap bodies are always designed for larger quantities of palletized goods with an average weight of approx. 250kg each. We use this technology for our customers wherever there is a large exchange of goods and where there are high demands for fast delivery, ”says Petr Kozel, CEO of VCHD Cargo.

VCHD Cargo also uses double-deck semi-trailers with a temperature control for its own lines. These are used for the transport of food but also for the transport of dangerous goods. These so-called “frigos” are equipped with an aggregate and a thermometer, which can also be controlled and checked remotely and of course also a contact thermometer is a standard equipment. In the double-decker variant, the second floor is flexible and independent of the loading area. Depending on the type of goods to be transported, the second floor can only be installed, for example, in the front part of the loading area, where lower pallets can be positioned one above the other. The rest can be loaded with pallets up to 2.7 m high. With full use of the double-decker variant, the trailer can take up to 66 pallets.

The second important aspect of regular transport is the reliability and speed of the transport carried out by VCHD Cargo. The fleet is fully utilized thanks to the appropriate personnel strategy. The vehicles are usually traveling with two drivers and on long lines, e.g. to southern Europe, these double crews can even switch with second crew. In this way, the journey continues and the drivers spend their mandatory rest periods in company apartments along the main European traffic axes.

VCHD Cargo’s fleet currently has 160 tractors and 180 trailers. On average, the technology reaches the age of 3 years and 100% of the pulling units meet the emission standards of Euroclass 6. All vehicles are equipped as standard for the transport of dangerous goods according to the ADR convention. The VCHD Cargo lines regularly serve more than 70 destinations across Europe and information about the current location of the cargo is available to the customer at all times thanks to GPS.

Is the hazardous cargo market about to change?

Hazardous cargo does not include just explosives, petrol and industrial gasses. Just ask any producer of household cleaning products or cosmetics. Few people know that according to the ADR treaty hazardous materials include nail polish, house plant fertilizers, car detailing products as well as disinfectant gels and sprays. Even fewer people wonder how the current extraordinary situation might affect availability of labour necessary for the transport of hazardous goods.

VCHD Cargo keeps on top of changing rules for the transport of hazardous cargo and has been a specialist in ADR cargo services for years. The company has its own fleet of 160 vehicles all of which have standard equipment for hazardous cargo transport and 80% of its transport capacity is used for hazardous products.

The ongoing coronavirus crisis has affect ADR transport, too – all new training and mandatory regular training has been suspended until further notice. The ADR treaty clearly defines who is allowed to transport hazardous goods – “employees of hazardous cargo transport companies whose job responsibilities include hazardous cargo transport. These individuals must be properly trained in hazardous cargo regulations appropriately to their level of responsibility and job description.”

Due to recent measures to combat the novel coronavirus, the United Nations Economic Commission for Europe decided to extend the validity of ADR driver cards (24 states agreed as of April 1). The validity of all driver training certificates that expire between March 1, 2020 and November 1, 2020 will be extended until November 30, 2020 and it will be possible to extend them further upon the completion of renewal training. However, VCHD Cargo expects to see a lack of ADR-approved drivers in the market in the near future. All VCHD Cargo drivers hold ADR certificates, are regularly trained and have years of experience with the transport and handling of such sensitive cargo. “At this point, our company’s priority is to retain our current specialists,” says VCHD Cargo, a.s. chairman Ing. Petr Kozel, adding that “on the other hand, we expect a potential increase in demand for hazardous cargo transport services once the COVID-19-related restrictions are lifted.”

This “Footnotes” section is a space for us to share our views on issues related to transport and logistics, a topic that is far too often reduced to a discussion on the state of highways and truck drivers’ behaviour. Sometimes, our opinion may not please everybody and sometimes they may be quite controversial. But they are always founded on our years of experience with the transport market.

This time, however, let us start on a positive note (the negative angle will soon follow, though) – VCHD Cargo‘s services are still in full operation both in the Czech Republic and in Germany where we have a local subsidiary. Our drivers continue to deliver goods even to customers in the hardest-hit parts of Spain and Italy and we are still able to guarantee 48-hour delivery to anywhere in Europe.

So much for the good news. Many of you might have heard reports that Czech carriers worry about a potential collapse of the transport market – trucks are pulled off the roads, companies must continue to pay fixed costs while customers’ payment morale is decreasing. Businesses lack money for wages and drivers are losing their jobs. To be honest, VCHD Cargo has felt the significant cooling of the market due to coronavirus measures, too, but we took the decision not to fire a single employee. However, we feel it necessary to mention something that has not been discussed in the media yet.

Carriers are among companies that contribute the most to the national budget. (We can prove this claim on the example of our own company: in 2019, VCHD Cargo generate revenues of CZK 720 million and paid approx. CZK 220 million to the state in various taxes.) The tax burden on transport companies in our country is more than 30% – including excise tax, highway toll, income tax, social and health insurance. Furthermore, carriers often serve as a source of interest-free credit. They typically pay their liabilities to the state within 14 days while customers usually pay their invoices in 60 or even more days. It is rather ironic that the only support Czech carriers have received so far during this crisis is a suspension of road taxes and tolls. We anxiously await the time when the handouts granted to anybody who complains loud enough in the media will have to be paid back.

Will transport businesses once again become the target of unprofessional politicians demanding that they foot the bill without any relief? If so, we may be facing an even greater shortage of drivers and even transport business in the near future d .

VCHD Cargo has decided not to fire anybody. We cannot bear the thought of leaving our drivers to cope with this situation on their own. But we must stress that we are greatly concerned about the situation. We find it really concerning that the state is unable to support one of the most affected markets, which also provides one of the fundamental services necessary for the functioning of our society, despite the fact that this market has paid disproportionate amounts to the state budget for decades.