Over the AsstrA corporate group’s 19 years in Lithuania, the local market has repeatedly changed. The economic crisis of 2008 had quite a big influence, as well as the Russian food embargo. In 2019, the Mobility Package is a major issue in the transport and logistics industry along with Brexit and the trade war between China and the USA. What changes will affect people working in the logistics industry? How will Lithuanian carriers reorganize their businesses in the new conditions? AsstrA Vilnius team members share their opinions.
The AsstrA-Associated Traffiс AG group has held a stable market position and offered reliable benefits to clients in even the most difficult economic conditions.
«For example, in 2016, a dispute arose between Poland and Russia. Routes from / to Russia could not pass through Poland. Therefore, AsstrA experts redirected traffic flows through neighboring Lithuania. AsstrA is an international corporate group with offices in Europe, the CIS and Asia. Our well-developed global network helps us adapt routes and be flexible in case of changes. Our clients do not depend on the economy or politics of any one country and can get a choice of routes and transport partners.
The Mobility Package will be another factor affecting the industry. According to AsstrA experts, it presents risks as well as opportunities. The market for transport will become more free, and there will be lower prices in the short run,” says Vilius Augulis, AsstrA Vilnius Branch Manager.
What will carriers do in this case? Agne Beseniene, Head of the South, North Europe & CIS Road Freight Transportation Department at AsstrA, suggests that carriers will follow the requirements of the Mobility Package and continue to work.
“Numerous Lithuanian transport companies return trucks to base every 2-3 months for technical maintenance. It's cost-effective, since Lithuanian vehicle and insurance services are cheaper than in Western Europe. After the Mobility Package rules go into effect, carriers will have to bring back their trucks every 4 weeks. This will lead to more available trucks going on routes from Western Europe to Lithuania and other Baltic countries.
“The second likely outcome will be more transport company subsidiaries being incorporated in countries closer to actual delivery routes. Some Lithuanian shipping companies have already launched this process. This approach will mean that bringing trucks home to the country of incorporation is faster and cheaper,” says Agne Beseniene.
However, the registration of new companies is not a quick process. The transition period will last from one to two years.
“The Mobility Package marks another turning point for the transport sector. 5 years ago, Lithuania took advantage of its geographical location as cargo flows to the CIS – to Russia in particular – passed through our country. These were high-margin shipments and there were enough orders for all the players in the transport and logistics market. After Russia introduced an embargo on a number of food products in 2014, the transportation market changed. Today, Western Europe is the main destination of Lithuanian traffic. Many Lithuanian vehicle fleet owners send vehicles to work in neighboring countries for 2-3 months at a time,” says Vilius Augulis.
The country's economy is largely based on the transport industry, which accounted for 9% of its GDP in 2018. More than half of the cargo is transported by road.
“As a forwarder, AsstrA is deeply involved in the market and quick to respond to challenges with solutions. Today, there is an acute shortage of vehicles for cargo exports. So AsstrA relies on transport companies from other regions. The adoption of the Mobility Package will contribute to the development of Lithuanian exports. Every 4 weeks, many trucks will return to Lithuania. For AsstrA customers that means the amount of vehicle space available for organizing transportation from the country will increase. Export shipping prices will drop and import prices will soon follow,” says Vilius Augulis.
When faced with challenging conditions, the AsstrA team searches for alternative solutions for clients. AsstrA clients appreciate this and are increasingly relying on AsstrA’s world-class services for their business. AsstrA Vilnius’ turnover from 2017 to June 2019 increased by 32%.