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No news is good news, says DSV 22

The UK/Scandinavia market is static at the moment – which is actually high praise in a Europe plagued by uncertainty over the future of the Europe and possible economic meltdown in many countries. “Westbound (inwards from

Scandinavia to the UK) has been very static but eastbound has remained good,” says DSV Road UK director, Karl Timmis. “However, exchange rates are slowly impacting on volumes.” That said, both the Pound and

the Danish and Swedish Krones are perceived as being relatively stable currencies. While the two Krones in particular do track the Euro in terms of their value, the consensus is that they would not be directly affected by any crisis in the single European currency and are thus a reasonably safe bet. This has been an important factor in keeping UK/Scandinavia trade reasonably stable, believes Karl Timmis. In the past few years, there has been a turnaround in the balance of trade between Scandinavia and the

UK, with more going out from the UK than coming in, for the first time in many years. That isn’t likely to change in the near future, says Karl Timmis. “There has been a decline in production in Scandinavia – it has become very expensive to operate there and a lot of production has moved out, mainly to eastern Europe.” At the same time, increased

demand for ‘RDF’ fuel – essentially, cleaned and bagged combustible waste - by the Scandinavian power generators means that there is a steady, large volume trade out of the UK, albeit a low-value one. This has done a lot to push up eastbound volumes, says Karl Timmis. UK power stations currently RDF

cannot burn because

technology to deal with the emissions has not been installed, although that could change over time. One depressing factor on inbound

trade into the UK has been the fact that the Diamond Jubilee and the Olympics failed to produce the

hoped-for increase in retail trade – indeed, the effect was rather the reverse as shoppers stayed away from London in droves, anticipating transport problems. Three months of lousy summer weather didn’t help, either. Now, though, DSV and other transport operators are hoping that things will improve in the run-up to Christmas. A lot of what the UK imports

from Scandinavia is material for the building trade, which has clearly suffered in the recession. On the other hand, a good chunk are housewares, which tend to do better when the housing market is depressed, because people do up their homes rather than build new ones. And Scandinavian designers have cottoned on to the fact that there is demand for cheaper goods rather than concentrating exclusively on the high end of the market. Automotive parts and

components are the other staple of the trade, although in the longer term this might be affected as the

car makers rationalise their plants and switch to lower-cost countries over the next few years. However, that could mean more parts moving longer distances, points out Karl Timmis, as production becomes more centralised. That said, the Scandinavian car

makers are well entrenched and in some cases cannot move as they have accepted government grants and support. The car industry is also generating

decent steel export business from the UK back to Sweden. DSV itself has reacted to the

market conditions by centralising as many functions as possible. It is also continuing to invest in its fleet for around 8,500 trailers, 2,000 reefer trails and 650 containers. “The market is mostly stagnant, but as we mainly lease our equipment, renewal is relatively easy,” points out Karl Timmis. “Also, remember that new Euro 6 regulations for truck emissions are due to come in at the end of 2013 and 2014.” Euro 6 standards will cut truck

emissions yet further but there is a price in terms of slightly increased fuel consumption as some diesel has to be used to burn off the emissions. To keep its fuel costs within bounds, DSV continually invests in driver training through its in-house programme. DSV moves a lot of trailers across

the water and Karl Timmis welcomes new ferry operator North Sea Ro Ro, although DSV has benefited mainly indirectly. “We are not a big user of the new service as we’re used to a daily frequency and it’s hard for us to support a three-days a week service. But it is a benefit in that it has added capacity and that has made capacity easier to acquire at busy times.” So far, there has been little impact

on rates, Karl Timmis says. Using the new service would also

mean a split port operation in the UK as DFDS runs out of Immingham while the new line uses Killingholme and DSV would also lose the benefits of automated track and trace for its trailers, says Timmis. While there are segments of the

market that are attracted by lower ferry costs – in fact, the new service might have had more of an effect on the lo lo container operators than the ro ro trade, Timmis suggests – many of DSV’s customers are demanding just-in-time transport. “The banks are not lending and holding stock isn’t viable, so long transit times aren’t really attractive. People are only ordering what they can sell, partly because the Internet has made demand a lot more transparent.” With traders demanding more

efficient and flexible service, while ordering smaller amounts, DSV’s new pan-European pallet service – which operates via a German hub - has been doing well, says Timmis. Admittedly, a lot of its business has come from eastern Europe rather than Scandinavia, where traditional trailer services can offer only slightly slower transit times, but some traffic has been attracted from the airlines by the 24-36-hour transit time offered on the premium of the pallet service. It also has the attraction of daily departures.

Issue 6 2012


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