Centrum Romania, a prominent participant in the logistics sector of Romania, provides advanced supply chain solutions as a member of Centrum Group Europe. In 2005, H. Essers Groep, a Belgian-based logistics and transport service provider, acquired Centrum Group Europe. This study presents a comprehensive examination of H. Essers Groep, encompassing its history, existing train terminals, proposed enhancements, competition mitigation strategies, and other aspects pertaining to train transportation.
Additionally, this study evaluates the pros and cons of rail and road transportation. Although the focus is on H. Essers and its location in Romania, the findings of this research can be applied in a Logistic environment. The researcher is examining these specific settings and will present the results to Mr. Buurman. Groep H., founded in 1928, is involved in this study.
Essers is now the largest family transport and logistics company in Belgium. They have 2,250 employees and operate in 26 branches across 12 European countries. “Groep H. Essers provides personalized and integrated transport and logistics solutions throughout Europe.” Originally known as Centrum Transport, the company was founded by Mr. Jan Daris in Valkenswaard (NL) in 1976.
In 1992, the choice was made to expand to Eastern Europe. They rented an office in Oradea and established Centrum Transport S. R. L. In 1996, the company acquired a 30,000 square meter territory in Oradea. Three years later, in 1999, the construction of Warehouse 1 in Oradea began and in the same year, Centrum Expeditii S. R. L. and Centrum investitii S. R. L. were established.
In 2001, Centrum logistics S.R.L was established and constructed warehouse 2 in Oradea the following year. Within the same year, they acquired 48,000m of land in Oradea. In 2004, construction began on a warehouse in Bucharest known as Cefin logistics park. Additionally, in the same year, Centrum Transport acquired 15,000 m of land to construct the third warehouse in Oradea. H. Essers Groep, a family-owned company from Belgium specializing in transport and logistics solutions throughout Europe, took over Centrum Transport in 2004.
When the train reaches the terminal, IKA will inspect the train and Centrum Transport’s employees will check the documents. Afterward, the train needs to be divided into three parts since it is too long for the 200m railway at the terminal. The train originates from Genk, Belgium and arrives in the South-East of Oradea. Along its journey, the train makes several stops at border crossings to change locomotives. In Budapest, it also stops to add a diesel locomotive to the front of the train since an electric locomotive cannot be used to travel to Oradea.
Further, the train occasionally has to make stops due to the presence of another train on the railway. On the provided map of Oradea, the head office of Centrum Transport Oradea can be seen situated on the opposite side of Oradea. Six employees are directly involved with the train terminal. Initially, Catalin and Ovidiu are responsible for organizing the load documents and handling all matters related to the train. These employees work in an office located at the terminal. Additionally, Raul serves as a planner ensuring that the train’s cargo is transported to the correct unloading address.
He is currently working at the Centrum head office in Oradea. There are also three truck drivers who are directly associated with the terminal. These employees handle the chassis and load containers onto trailers, preparing them for the next driver who will transport them to their unloading destination. Two out of the three yard drivers are always on duty, overseeing train terminal planning and managing documents related to the trains. The three yard drivers’ names are Raul, Ovidiu, and Catalin. Normally, Centrum Transport receives and dispatches three trains carrying loads every week. The trains arrive on Monday, Thursday, and Sunday, while departures take place on Tuesday, Friday, and Saturday.
Approximately 20 containers are carried on one train. There is no minimum load requirement for the train as it must return to Belgium and Centrum Transport values long-term client relationships. Fortunately, the import and export quantities are well balanced. The train can carry a maximum of 35 containers, which brings the train’s length to around 600m (including a 30m locomotive), the maximum permissible length. Additionally, the total weight of the train must not exceed 1100 tons. During the loading or unloading process, a reachstacker transfers the loads between the chassis and the wagon.
Essers is a transportation company that faces strong competition. The researcher conducted a comprehensive study involving three multinational companies and two national companies to gain a broad understanding of this subject. Keuhne Nagel specifically opts for train transportation due to its favorable rates. When the company needs to ship more than 10 containers to another country, it finds train transportation to be the most suitable option. However, the choice also depends on the distance and quantity, as Keuhne Nagel also has access to sea and other modes of transportation. The company transports goods globally, with a focus on Europe and the Middle East.
The company does not have its own terminals because it is expensive to own them. Instead, they benefit more from freight forward contracts. However, a disadvantage for Keuhne Nagel when transporting by train is that if they have more than 10 containers ready to be loaded, there may not be enough platform space. In this case, they would have to rent an additional port and be charged per container, which is also known as demurrage. There is also a risk of losing a container when the train departs from the port, as some rail stations do not update their system.
The preferred approach in this situation is to include additional charges for ports, such as detention fees. While the remaining wagons are on their way to the railway station, the wagons that have already arrived will need to pay for parking at the station (which could last up to two or three days while they wait for a different train). The level of stress in rail transportation is higher compared to other modes of transport. It’s important to remember that there may be various unforeseen expenses associated with rail transport. Schenker AG, a German logistics company, operates as a subsidiary of Deutsche Bahn, the German railway company.
The Deutsche Bahn is the largest operator in the European Union and is responsible for land, sea, and air transport as well as contract logistics. It is divided into three main operations groups: DB Bahn, DB Netze, and DB Schenker. These subsidiaries are independent companies and Schenker, being part of Deutsche Bahn, is the top rail transportation provider in the European Union. They have the necessary infrastructure in Romania and transport goods from all over the EU to Romania. They mainly import more than they export and have their own terminals in Oradea, Curtici (Arad), Cluj, Iasi, Galati, and Bucharest.
Having a clear understanding of the market and its competition is crucial for achieving success, whether it’s H. Essers or any other company. The competition can be categorized into two types: direct and indirect. Direct competition occurs when other companies offer the same product or service within the same market. Conversely, indirect competition refers to competitors who provide the same product or service but target a different market.
Competition in the open market involves sellers striving to secure sales, profit, and market share by providing the best combination of price, quality, and service. This competition is essential for maintaining a balance between supply and demand, known as market rivalry. Additionally, companies can gain a competitive edge by offering equivalent value at lower costs compared to competitors or by providing superior value through differentiation that justifies higher prices.
Competitive advantage is achieved by aligning core competencies with opportunities according to the Business dictionary. The km-cost price represents the cost of salaries, truck and trailer or chassis with container costs, as well as repair, tire, and diesel costs. However, road and toll charges are not included in the cost price. The pie charts display the breakdown of different cost prices per km.
In Belgium/Holland, the cost-price per km is higher compared to Romania due to higher salaries. The route from Genk to Oradea is approximately 1,600 km. Hence, a Romanian driver’s trip cost will be €1142.40, while a Belgian driver’s trip cost will be €1700.80. Please note that these costs do not include road and toll charges. The transportation cost for one container or trailer from Oradea to Genk (or vice versa) is €800. This price is based on a minimum of 50 containers or trailers for one-way trips within a week.
When the standard is not met, the cost price per container or trailer increases rapidly. The costs per container in Euros are as follows: 900, 800, 700, 600, 500, and 400. The total costs in Euros are: 90000, 80000, 70000, 60000, 50000, and 40000.
H. Essers finds transporting by train to be cheaper than transporting by truck. For H. Essers, the cost price for transporting a container from Oradea to Genk (or vice versa) by train is €800,- while it is €1142.40 or €1700.80 for transporting the same container via road without considering road and toll charges!
When deciding whether to ship freight or machinery by rail or truck, it is crucial to carefully consider various factors. Cost-effectiveness is important, but other considerations also come into play. These include distance, destination, volume, and the nature of the goods being transported. Evaluating the advantages and disadvantages of using trucks or rail for shipping purposes requires taking all these factors into account. By assessing specific requirements and priorities, one can determine the best transportation option.
Rail Freight is typically more energy-efficient compared to road transport. It offers more flexibility and convenience but may have potential delays. The shipment is vulnerable to damage during the transfer from the train to another mode of transportation. On the other hand, truck transport provides more options such as TruckLoad (TL) and Less than TruckLoad (LTL). Rail transport is generally smoother than truck transport and has a wider range of routes, as it is not limited to fixed tracks. It is also experiencing growth in Romania. However, it contributes to environmental pollution and is less environmentally friendly compared to rail transport.
Trains are increasingly traversing long distances on good roads in most countries, with ongoing improvements. They operate on a set schedule, although this can vary depending on the shipment’s priority for cost efficiency. However, truck transport is generally seen as relatively cost-effective, considering factors such as road-tax. Trains offer a lower chance of accidents and have larger size limits, enabling the transportation of heavier and larger loads compared to trucks. Additionally, they offer the benefit of just-in-time deliveries and are advantageous for multimodal transport. However, there might be congestion and restrictions to drive during weekends or to cross certain countries like Austria and Switzerland. Furthermore, there are challenges in connecting railway companies from different countries, and restrictions based on weight also exist.
Centrum Transport has a compelling background. It was initially established in 1976 as a Dutch company. However, in 1992, they decided to broaden their horizons and opened an office in Oradea, where Centrum Transport S.R.L was established. Later in 2004, the renowned Belgian company H. Essers Groep acquired Centrum Transport. H. Essers Groep is a prominent family-owned transportation and logistics company that operates across 12 European countries with a total of 26 branches.
The current terminal in Oradea was established in 2006 by H. Essers groep with the aim of creating a direct rail connection between Genk and Oradea. Currently, the terminal operates three weekly trains for arrivals and departures. However, there are several weaknesses associated with this terminal. Firstly, before entering the terminal, the train needs to be divided into three parts. Secondly, the terminal itself is outdated and does not have modern machinery. Additionally, it is not conveniently located near the company’s headquarters in Oradea, and there is insufficient space available for container storage. Considering these factors, it becomes crucial to evaluate whether H. Essers gains a competitive advantage with their train transportation.
H. Essers Groep can achieve a competitive edge in the market by providing equivalent value to their competitors, but at a reduced price. They have the ability to transport goods from point A to point B, similar to other companies, but they accomplish this at a lower expense through the utilization of trains instead of trucks. This cost advantage enables them to offer more affordable prices compared to competitors who solely depend on trucks for transportation. Nevertheless, H. Essers Groep lacks a competitive advantage in terms of differentiation since numerous other companies also transport goods between Belgium and Romania using trucks and/or trains.
After conducting this research, we can confidently conclude that H. Essers Groep has two optimal choices for locating their terminals. The first option is to construct a terminal in Crisana (specifically Oradea and Arad). This decision is primarily based on the satisfactory road and rail infrastructure in that region. Furthermore, there is already an existing warehouse in Oradea, eliminating the need for construction and avoiding additional costs. Overall, these factors make Crisana a favorable location for H. Essers Groep’s terminals.
Essers does not need to replace their workplace and resources. The area of Arad has good connections for deliveries and transporting in the south of Romania. Another option to implement a terminal would be in Walachia (Bucharest). This choice is based on the fact that there is already a good road infrastructure established in Walachia, and it will be improved as they are building 5 highways in that area (4 of which are connected with Bucharest). In Bucharest, there are many H. Essers’ clients established, meaning that imports to Bucharest are much higher than exports.
Implementing terminals in Bucharest can reduce the number of empty kilometers. Currently, rail transportation options are not ideal, but if H. Essers chooses to construct a terminal in Walachia, they can establish a more suitable connection between West-Romania and Bucharest. Both buying or hiring a terminal have their own pros and cons. Building a terminal can be highly profitable for H. Essers, but it also comes with increased risks. On the other hand, contracting a terminal may not be as profitable as building one, but it involves lower risk.
Reference
- http://www. essers. com
- http://www. businessdictionary. com
- http://www. romaniatourism. com
- http://www. tramos. ro/parcauto
- http://www. etcproceedings. org/paper/modelling-road-and-rail-transport-in-the-short-termapplication-and-results
- http://www. dmoz. org/Business/Transportation_and_Logistics/Trucking/Truck_Transport/Comp anies/Europe
