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International parcel market signed, sealed, delivered.



"Business Review", April 2005

The international deliveries market in Romania is one of the fields primed for further development in the near future as it contains competitive players. Demand for international shipments grew, while companies expanded their activity countrywide. A study by Synovate Romania, a market research company, places DHL International Romania top of the market with a 49 percent market share.

The same study shows that from the manufacturing field - the code name for food products, tobacco, textiles, wooden products, different kinds of equipment and computers - 55 percent of respondents have between three and nine shipments per month.

Companies or individuals in the wholesale and retail trade mainly have fewer than two shipments a month, and only 40 percent of them use parcel services more than three times per month. Moldova is the top regional user with 57 percent of all the customers from this area making deliveries more than three times per month.

Overall, 43 percent of parcel services companies' customers ship more than three times a month. In Bucharest, the ratio between fewer than two and over three shipments a month is balanced. For the whole country, export shipments lead, while import covers only 47 percent of the total.

The average monthly spending on international express shipments comes to an average of EUR 249 per month, and 48 percent of customers spend EUR 50 to EUR 250 a month. Only 11 percent of customers spend more than EUR 500, while 18 percent spend less than EUR 50.

The preferred destination for shipments, in terms of volume, is Western Europe with 72 percent coverage. Eastern Europe receives 14 percent of shipments, North America and other regions nine and five percent respectively. In terms of value, the percentage stays roughly the same. EU accession sends firms to meet the challenge James Gray-Cheape, the Managing Director of Pegasus, sees the market as dynamic, competitive and well developed, offering consumers many choices of products and suppliers. "The market now contains all the major and minor players," he said.

According to Gray-Cheape, the market has seen substantial increases in the domestic and international shipping and these increases will continue in the short to medium term. "The market will settle in the medium term as these increases are not sustainable for the long term," he added.

Pegasus entered the Romanian market in 1997, and has been selling international shipping products, express and freight since 2000. "The market is currently in a steady upturn," Gray-Cheape said. The company has a fleet of 40 vehicles and 130 employees. Its network expanded in 20 major cities and Pegasus plans to open another 20 centers in 2005. According to the Managing Director, the most active cities of the countries are Bucharest, Timisoara, Cluj and Brasov.

Imports through Pegasus increased by 30 percent in 2004 compared to the previous year. Domestic volumes and intra-city shipping also saw increases last year.

This market has an increasing rate that outstrips the general economical average, said Alexandru Gheorghe, commercial director of DHL International Romania. "Operational investments lead directly to increases in the quality of products and services," he said. Presently, the company is focussing on this aspect, having made over EUR 1 million in investment in 2004 alone.

Gheorghe believes that the investment policy for such a company is determined by various factors among which is the approach of EU accession. Thus, it is hard to determine the investment volume that a company in the field should have each year. The investments should take into account the economic context and the development strategy the company has in the medium and long term. "According to analysis by various sources, the parcel service market is staying between EUR 25 million and 30 million," said the commercial director.

Last year, DHL International Romania accounted for a 20 percent year-on-year increase in shipment volume and a 30 percent increase in turnover. The company expects similar results for 2005 due to the increase in the company's portfolio of clients.

DHL was the first international express shipments company to enter the market when started its Romanian operations in 1984 through an agent. In 1991, DHL International Romania started to operate on its own and also began to use charter planes for shipping to and from Romania, Gheorghe said. He added that DHL was also the first company to receive an accreditation certificate for quality management ISO 9001/2000.

In 2003, when Deutsche Post World Net took over DHL, the company merged with Danzas and Deustche Post Euro Express under DHL's name. The move led to new products and services, and presently the company has four main divisions: DHL Express, DHL Freight, DHL Danzas Air and Ocean and DHL Solutions. The international network covers over 220 countries worldwide and four million customers. The number of DHL employees has reached 160,000.

The Romanian branch has 260 staff working in 25 regional centers. It uses two special airplanes and over 100 cars for the whole country, Gheorghe said.

A massive investment program was started in 2004. This focused on modernizing operational centers in Brasov and Oradea, using one special plane for the Western part of the country and setting up new centers in Arad and Bucharest. This year the company intends to increase its aerial transport capacity and to open a terminal exclusively for international road shipments. Additionally, it plans to reorganize the domestic distribution network.

Fair competition is part and parcel of market

Iulia Nartea, executive director of UPS in Romania, thinks that the number of competitors on the market is not high, but they are strong and well developed companies. "UPS sees competition as an element of stimulation, as long as it is fair play," she said. "Soon, we will be able to compare activity in Romania with the neighboring countries in which we have been operating for longer."

She believes that the market has grown because new technologies have been adopted, such as the possibility of tracking a shipment from the internet site, a facility that all the major players on the market offer. She said that of all the 115 million visitors to the UPS main site, 9.1 million request expedition tracking.

UPS started its activity in Romania in 1990, soon after beginning operations in Eastern Europe. In 2000, it established the company Trans Courier Service (TCS), which became an authorized agent for UPS in Romania. TCS offers exclusive international express shipments. Since 2002, UPS has operated two charter flights in Bucharest and Timisoara.

The company has three customer center offices, and plans to open another two in the near future. For 2004, it had a turnover of almost $4.4 million and estimates some $5.7 million for this year. Export shipments grew by 30 percent and imports by 20 percent from to 2003.

Romanian market delivers the goods

In terms of transportation and express services demands, Romania is proving to be a country which allows a significant development in this area with a higher percentage growth than Hungary, Poland, the Czech Republic or Slovakia.

"We expect the local market to grow even more consistently, creating excellent opportunities for development," said Monica Anita, marketing coordinator of TNT Romania. She believes that Romania is the second largest consumer market in Central and Eastern Europe, and is proving to be one of Europe's fastest growing markets. Companies are interested in and sometimes depend on transport services, allowing them to develop better practices in their own core businesses, Anita said. She estimates the express international market at EUR 40 million.

TNT Romania started operations in 1999 after taking over the Romanian company Romcargo, which had been acting as a TNT agent since 1991. In 2002, the company received the ISO 9001 certification and in 2003 the Investor in People (IiP) accreditation. Last year, it opened its third international gateway in Cluj.

TNT Romania has more than 360 employees in 20 offices in all major cities dealing with 20,000 documents and parcels weekly. The company works with 10,000 customers like ING Barings, Siemens VDO Automotive, Mobifon, Solectron, Ericsson Telecom, Robert Bosch, Sony Overseas, Autolive, Continental Automotive and Leoni Wiring Systems.

For 2005, the company plans to invest in its vehicle fleet. According to Anita, it achieved a market share of 43 percent in 2004, while in 2003 its profit saw a 60 percent year-on-year increase reaching EUR 12.8 million. Last year's results are due to introducing new products like economy and express freight, she says.