BR Interview | Mircea Vlah (Dumagas): Dumagas on its way to the top of the Romanian transport industry

Newsroom 07/01/2020 | 12:52

Founded in 1996, Dumagas has been one of the pioneers of the Romanian transport market, and the successful three-year restructuring plan it recently went through has brought it back to profitability and high operational efficiency, as it introduced new technologies and renewed its vehicle fleet. BR talked to Mircea Vlah, the CEO of Dumagas, to learn about the company’s future projects and get some insight into the Romanian transport industry.

 

Romania’s transport industry was consolidated as a result of the increased consumption levels and the expansion of modern retail facilities. How would you characterise the sector at this moment and what are its biggest challenges?

The national road transport industry has grown, but I believe it has not yet matured. The local transport market still operates using traditional profit-driven methods and doesn’t properly calculate and negotiate its contracts with big retailers and multinational clients. They still go along with low standards or assume that they won’t be the ones getting caught doing the wrong things.

We try to impose a quality standard in the temperature-controlled logistics chain, and our entire fleet has been renewed with a new generation of trucks. The market continues to be moderated only by prices, and much less by service quality and work safety.

Dumagas, one of the oldest transport companies in Romania, has gone through a successful restructuring process. How did you reposition yourselves and what are they key elements that contributed to this success?

The restructuring process took about three years. In that period, we reviewed our internal processes, the profitability of our business lines, renewed an entire fleet of truck heads and semitrailers and upgraded the company’s technological processes.

Since 2014, we’ve focused only on new trucks with improved service plans and extended guarantees. We’ve operated through a mix of our own fleet, a firmly subcontracted fleet with long-term contracts, and the spot market. The key to our success was the improvement of work processes through a real-time visualisation of results and associated costs. Together with each department, we created “dashboards” to follow in real time the truck performance, the financial situation and the commercial result. The support we’ve enjoyed from the team to implement all of these changes was another decisive factor in successfully conducting the restructuring process.

Of all the business lines on which Dumagas is active, which are the ones you see as strategic and what projects are currently in development?

Our strategic business lines are: international tarp transport, where we’ve adopted a highly performing and creative way of operating in order for all our trucks to be operating in a difficult period in terms of the lack of workforce and the multiple international regulations; domestic temperature-controlled transport, where we managed to become market leaders in 5 years as a result of the company’s successful restructuring process; storage and distribution of frozen products – in this area, we’re among the few “pure-blooded” logistics operators, as we don’t mix product logistics with distribution and sales.

What are the business products that make Dumagas stand out on the local market? Which are the market segments on which Dumagas is a leader?

Dumagas Transport is a leader on the domestic transport of frozen and refrigerated food products. On this segment, we operate with over 100 mono- and double-temperature trucks for the biggest clients in retail and FMGC. We’re also a strategic supplier for several important clients in the automotive and consumer industries. For our daily operations, we use a highly performing software which helps us follow in real time the performance of every truck and every department in the company.

Europe is facing a difficult political moment with Brexit. Will your industry be affected by this event?

A no-deal Brexit would have a major negative effect on the transport and logistics industry. We hope that the negotiations result in a clearly defined working process and that it is clearly communicated to all the interested parties. Together with the team, we’ve developed a Brexit crisis plan and we’re committed to staying close to our clients in the UK, even in this difficult transition period.

Service exporters have traditionally been some of the biggest contributors to the state budget, especially through their foreign currency impact. What is the transport industry’s contribution to the Romanian economy?

The transport industry is a net foreign currency contributor to the state budget. Of the EUR 40 million turnover in 2019, about EUR 30 million are represented by the foreign currency influx brought by our company from our external clients through international road transport.

International transport companies are sensitive to the first signs of economic crises and the related declines in the trade of goods. What’s your view on the Romanian economy in the upcoming period from this point of view?

We believe that the Romanian economy is completely dependent on the big European economies. If Germany, the UK or France began to show signs of a slowdown or crisis, our economy would be hit by a much stronger effect due to our lack of alternatives and the lack of a national contingency plan.

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