ITALY\\\ North and south


Many operators claim to cover the whole of Italy, but how thoroughly do they do it, asks Hellmann UK commercial director, Matthew Marriott. A lot depends on the strength of the Italian partner and the links that they have with them, and Hellmann is fortunate in this respect in that it has for many years worked with Siſte Berti, the doyen of Italian distribution companies. Moreover, Marriott explains,


“over the past few years we’ve worked with them within System Alliance Europe, which is a standard platform for data exchange.” What it means is that Siſte Berti can provide tracking and tracing for Hellmann’s consignments


throughout


its network and because the Italian haulier has such a comprehensive network, that means all the way down to the south of the country as far as Bari. Hellmann is one of the few


operators from the UK that can offer direct services not only to the major northern industrial centres like Milan and Turin, but also three times a week to Bologna and Rome, and in the summer to Naples. Moreover, Marriott adds, “we don’t stop our services to Italy in August,” when much of the country’s industry shuts down for summer holidays. The company is meanwhile


always looking to add new direct destinations in Italy, as volumes grow – Hellmann currently operates around 12-15 direct trailers a week from the UK to Italy. While Siſte Berti can always provide good connections to places not directly served, direct routings save time and handling. The southern half of Italy is


a very different market from the north. “There is definitely less industry and more food production,” Marriott explains. But the food industry has spawned a manufacturing base of its own – things like cappuccino machines or equipment used in food manufacturing, and these are exported all over the world. Perhaps too much has been


made of the country’s economic problems, he suggests. “Italy is one of the richest places in the world on a per-capita basis. It’s the Government which is short of money, not the people.” That factor has meant that it is still


Refrigeration is hot topic


Italy is a major destination for Woodland Global and figures prominently in a couple of the


Essex-headquartered


forwarder’s vertical segments, says development director for the Europe, Middle East and Africa region, Alan Langdon. Woodland’s association with


the country intensified when it acquired specialist Italy and Iberia forwarder Milom a few years ago. “That meant we strengthened our service, primarily from the UK, but also into the UK, mainly from northern Italy,” Langdon explains. In common with the rest of the forwarding industry, volumes to Italy dipped during the recession, but have since staged a recovery and are moving back towards pre- crisis levels. Woodland has for some time


moved commercial refrigeration equipment – chiller cabinets or air conditioning equipment -


from


overseas manufacturers to the UK for customers like supermarkets. It is in essence a branch of project forwarding and it is important to ensure that items arrive in the right sequence so that the complex, bespoke designs can be assembled in the right order. It’s also essential to ensure that nothing is damaged, because many of the components are custom-made and would have to be remanufactured. Many items are also heavy and require hoists and other liſting-gear. Italy was traditionally a major


manufacturing centre for this type of equipment and while some production has moved to the Far East, it remains an important sector.


possible for UK traders to go on doing business with Italy, although there issues with cash- flow – it routinely takes 90-120 days to get paid in Italy, although this is nothing new and it is something new exporters to the country might wish to consider building into their profit margins. Having a strong Italian partner


that can ride the financial ups and downs certainly helps. Italy may be only 900 miles


or so from the UK, but it is the cultural differences rather than operational issues that


freight


firms and their customers need to be aware of, says Marriott. Roads and rail systems are by and large efficient, as are the seaports. Indeed southern Italy has become a major transit country for Greece,


Albania


and other parts of the Adriatic because the road journey to its southern ports is so swiſt. Combined with frequent ferry services, it means that trucks can arrive at destination in about the same time as the overland journey but with the driver fully rested and able to do a full day’s driving in the destination country.


Issue 3 2014 - Freight Business Journal


Not out of the woods yet, says leading groupage operator


19


Italy may have technically come out of recession, but that doesn’t exactly mean that it is booming, warns Phil Denton, managing director of Manchester-based specialist, Ital Logistics. Italian manufacturers are still relocating to places like Slovenia or Eastern Europe, in part to avoid high corporation taxes. In some cases, the relocation is purely financial, but some jobs are migrating across the border too. The


forwarders have to fight hard to get it sometimes. “We are finding that, for a variety of reasons, a lot of our competition is becoming much more financially aggressive,” Denton explains. There are reports of sales managers being told to go out and get business “at any price”, a dangerous game in Denton’s estimation, as once rates are nailed to the floor, it is very hard to prise them back up again. Nevertheless, Ital is maintaining


trend has particularly


affected the heavily industrialised north-east area of the country, which is also the closest region to the Slovenian border. Of course, as a forwarder, Ital can always follow the traffic to wherever it ends up in Europe – or even beyond – and is always open to suggestions for new partners in various countries, says Denton. Three prime ministers in the


past 18 months and corporation taxes of 55% aren’t exactly a recipe for business confidence. Certainly, on a recent visit to southern Europe, Denton found that Italy hasn’t snapped out of recession to the extent Spain and Portugal have, at least if the surge in Ital’s Iberian business is anything to go by. And Roberto Tagliaireni, founder of Ital’s Italian partner ITX Cargo says that the situation in Italy is not really improving, in the same way that the UK appears to be. Denton comments: “Italian glasses, in the business world, seem to be half empty, as opposed to the optimism of being half full.” That said, there is still plenty of business to and from Italy, though


its regular service of around ten trailers a week out to Italy and 15 in the return direction. One factor that has increased


the level of competition is the removal of borders in the EU. Whereas pre-1992, road hauliers leſt complex activity like customs clearance to genuine forwarders and consolidators, nowadays a trucker with a bit of space on the back of an otherwise full load can ring round a couple of likely contacts and fill the space himself without recourse to a forwarder. The complicated customs


rules tended to exacerbate the very regional nature of the Italian freight market up to the early 1990s. Because there was a very limited time window in which to


perform deliveries on wheels aſter the T1 form had been discharged, forwarders tended to send groupage trailers to individual cities rather than send a trailer from one place to another. There are still faint echoes of this


situation today, in that domestic distribution within Italy is still expensive – oſten, the international trailer arriving from the UK will have lower per-kilometre operating costs than an Italian domestic truck, thanks to very high fuel costs which now exceed even UK levels, says Denton – so the pattern of services to Italy still tends to favour groupage trailers to individual cities, even where those cities may not be all that far apart from each other. However, the other factor to


consider is the EU drivers’ hours rules. It is quite difficult to squeeze even two UK-Milan trips into the 90-hour fortnightly driving limit, especially for anywhere north of London or south of Milan, without using double-manned vehicles or overlapping drivers. “You do have to be quite imaginative on how you use your drivers and where you change them over,” says Denton.


Strength in numbers


It was Napoleon who famously described Britain as “a nation of shopkeepers” but the UK’s 4.8 million or so businesses is now well behind Italy’s six million companies. A few global giant concerns like Fiat and Finmeccanica, Eni and Enel apart, these are overwhelmingly small firms with a couple of employees or so, or sole traders. It makes for a dynamic business scene, especially as many of these small firms are becoming export-minded, but


it


does mean that Italian forwarders have their work cut out keeping up with their customer base, say Sergio Farronato and Alessandro Cirelli, respectively chief operations


officer and national sales manager at forwarder Geodis Wilson Italia. It’s one reason why the Italian freight industry still


tends to be


quite regionalised; Geodis Wilson has ten branches in Italy, each handling the needs of a myriad number of small customers. While there have been some towards mergers, these


moves


have mostly taken the form of foreign firms buying up Italian companies, oſten well-known brands in the luxury goods sector. Naturally, the buyers want to maintain the Italian essence of the company in question, so in practice little changes on the ground. Nor does this stem the


wellspring of small companies that are constantly being formed by Italians. “The Italians are an independent-minded people,” explains Alessandro Cirelli. “We can find it hard to cooperate with other people.” Even in these recessionary times, while 365,000 companies went to the wall nationally, another 384,000 new ones were formed. The net increase of 19,000 is in fact down on previous years - typically around 30,000 – but it is still a very large number. Many companies – small and


medium sized – are becoming more export-orientated, which is good news for a forwarder like Geodis Wilson. “Industry is more and more


trying to internationalise; they can’t only be in the Italian market, and we are giving them advice on exporting and logistics.” This fits in with Geodis Wilson’s seven corporate Golden Rules, the first of which is “To make it easy for the client to do business with us.” Another of the rules is “To get


paid for what we do” and Italian businesses are a little notorious in this respect; payment terms are routinely 90-120 days or even more. Geodis Wilson’s approach is to concentrate on those companies that do pay promptly, an approach that more and more service providers in Italy appear to be taking.


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