Importance of outsourcing felt by many now

There is no need to prove that the logistic sector has been hit very hard by the recession. Logistic enterprises are forced to grant substantial discounts to their clients in order to maintain their relationship and also to keep the client alive. – As a result of the 4 percent drop in GDP foreseen, the Hungarian market of logistic services is expected to shrink by 8-10 percent – says Nick Murray, managing director of DHL Supply Chain. Recession is expected to be a long term one. Many Hungarian logistic service providers are several years behind their Western European counterparts in terms of professionalism and flexibility. However, they might be able to fill market gaps by taking over some activities from their clients or by developing new services. – Intense and painful price competition is coming with a drop in rates and I see no way of avoiding it – says Dr. László Duma, managing director of Adversum Kft. Logistic service providers are doing everything in their power to help their clients in maintaining their financial stability. One has even been forced to grant a drastic rebate for services performed in the past in order to maintain the liquidity of its client. – For a well defined period, we are serving some of our clients at rates which are generating a deficit for us, because we cannot afford to lose them – says Péter Pesztericz, sales director of trans-o-flex. At the same time, new clients are also appearing, because many clients have realised that costs can be reduced by the outsourcing of logistic activities. In the opinion of Zoltán Szabó, managing director of Ghibli Kft, apart from improving their own efficiency, they must also help their clients in doing the same. A growing number of manufacturers and retailers will soon realise that they should not pursue forwarding activities themselves in such an unpredictable economic climate. As Péter Pesztericz tells us, they have succeeded in persuading clients who had kept refusing their offer for years in the past. According to a survey conducted in April, 67 percent of companies are devoting energy to the optimisation of their processes apart from reducing costs. According to Krisztián Bóna, head of the consulting section of MLBKT, the crisis offers companies an opportunity to revise their operations and to rationalise activities in order to improve long term competitiveness. For example, trans-o-flex is involved in negotiations with an office equipment company about outsourcing their warehousing activities at the moment. 2009 is expected to be a turning point from many companies with great pressure on all enterprises to improve cost efficiency. Apart from improving the efficiency of their existing operations, DHL Supply Chain is introducing new technologies to improve competitiveness. There are some areas where recession has brought positive developments. As György Kovács, managing director of Katedra Mix Kft tells us, companies have become more cautious regarding the purchasing or leasing of new commercial vehicles. This is good news for vehicle rental, like that of small commercial vehicles operated by Katedra Mix. In the opinion of Péter Ungi, head of the rental division from Levantex Kft specialising in Iveco trucks, demand is focused on large (12-18 tonnes) trucks which can still be driven with a category “C” license. Commercial vehicles are often rented with the driver. This is how many vehicles operated by Direkt Fuvar Kft perform deliveries in Budapest for clients. – We are optimistic regarding the possibility of an end to recession in 2010 – says Nick Murray. Retail is expected to fill a more important position within logistics following the recession than in the past. “Survival of the fastest” will apply to the logistic sector as well, with companies responding to changes most rapidly having the best chance of survival.