Bypass roads. The path to success of a logistics company

Chernivtsi enterprise MB Courier began its history with small courier services and in 15 years it has grown to the level of one of the leading logistics companies in Ukraine. It offers a variety of solutions for the delivery of industrial, food products throughout the country and abroad, the services of its own consolidation warehouses. Founder and CEO Roman Zagaysky spoke about actually working solutions and generally about the situation in the domestic transport services market.

Roman Zagaysky entered the business environment quite organically. His father, a journalist, once headed the newspaper Young Bukovynets, known in the region since Soviet times. Saved her from extinction and gradually turned it into a successful business with a number of related projects. In the early 2000s, there was a need to create their own network for the publication, and it was precisely this direction that the son of Bogdan Zagaysky, Roman.

An own retail network was created - press kiosks. Over time, their number increased to more than twenty, in the main locations of Chernivtsi. In the MB marketing system, in addition to its own publications, central and other regional publications and related products are also sold. The company has several cars of different tonnage and a warehouse where the press is sorted.

From this activity, in fact, the main business of the entrepreneur was born today: the logistics company MB Courier. At the start, they had one car and five workers. “First, small orders were carried out. We were the first in Chernivtsi to start delivering flowers, back in 2004. Gradually, the volume and dimensions of orders increased significantly, business clients appeared, ”recalls Roman Zagaysky. At the moment, the company employs a hundred workers, there are twelve trucks and a warehouse system. MB Courier has opened twelve representative offices in key cities of Western Ukraine, as well as in Kropyvnytskyi and Dnieper. The branded vehicles of the company carry cargo by inter-regional, internal-regional and international routes.

About 80% of the customers of their services are regular customers. Such a portfolio was developed using quite classical methods. “Initially, we were engaged in cold sales. They took the "Yellow Pages", other ads and phoned, searched for customers. We didn’t do any advertising, and now we’re not doing it, only the site. Many system-forming customers have been working with us for 5-7 years. If you need to attract additional customers, we again work by the method of cold calls, we use specialized platforms. Shippers, logisticians, carriers, etc. find each other on them, ”says the founder of the company about working methods.

With regard to profitability, the entrepreneur states: the transport business has long become unprofitable due to great competition. Of all the types of cargo, those that require special conditions are interesting, for example, the use of refrigerated trucks, international ones, and those that come with a range of services. High season for transportation is the fourth quarter, especially November-December. Black Friday, the feast of Nicholas, New Year and Christmas carriers are waiting for no less than children.

An important role in the development of the business was played by related services: storage, cross-docking, cargo consolidation and others. However, without the key service - transportation - they simply could not exist, therefore, it is not necessary to talk about its reduction using the Pareto principle. And yet, reliability is the factor that helped to attract regular customers and keep them. “Often you take losses, but execute the order so that the client chooses you the next time. There are breakdowns, accidents, various situations on the road. Then we do quick repairs, replace the car, in stressful conditions we solve the problem - so that the goods arrive at their address on time, ”Roman Zagaysky assures.

The terrible state of domestic roads is the number 1 problem for everyone who works in this market. Fuel reaches 75% of the cost, along with tires, parts and car repairs. And only then - taxes, salaries, rent of warehouses, modernization and the like. Risks of damage to the car, cargo, time spent on order fulfillment are 1.5-2 times higher than European ones - these are our realities. For a standard 9-hour shift in Europe, you can drive 900 km, while we have at best 600, and in some directions 500. And all this affects the price. The cost of transportation in Ukraine is higher than in Poland and a number of countries.

The most demanded (except for transportation) services of the company are warehousing, cross-docking and consolidated cargo. Cross-docking is a reload, storage and delivery of cargo. Here, usually customers are other transport companies or manufacturers. For example, a car with an imported load drives in. He was cleared, but there are goods at three addresses. At the warehouse it is unloaded, distributed and further transported to the addresses of smaller cars.

Consolidated cargo is a wholesale transportation. Employees of MB Courier collect orders from various points in one final location in a small car. They are loaded onto a larger transport, sometimes they can also get goods along the way. This reduces the cost of customers, and the company helps to ensure the profitability of the route. Such additional loads are relevant during periods when transport for international flights leaves the country in large numbers.

International transport is a separate and relatively new direction of the company. In addition, it is also a constant factor influencing the domestic transportation market. “We go to Austria, the Czech Republic, Slovakia, Romania, Bulgaria, Greece. This is import and export, in approximately equal shares. There is a great deal of work in Europe. Particularly problematic are obtaining permits and synchronization with Ukrainian legislation. For example, we issue permits for such transportation only for cars from 10 tons of full weight. Common 3,5-5 tons go without them. But in Europe, permission for such a weight is already needed. To get out of the situation, we add trailers and make a road train to reach 10 tons, ”the founder of MB shares his experience.

When domestic companies export in bulk, a certain vacuum is created in the domestic market, the cost of transportation increases, but at the same time, the voltage increases, the time for transportation and the like decreases. When the EU quotas are exhausted, countries do not give permits - in Ukraine there is an excess of cars, and therefore the cost of services drops significantly. Last year, says Roman, there was a situation where for four months Poland did not give permits even for transit, not to mention direct deliveries. And prices fell by 25-30%, which reduced the profitability of transportation to zero, or even to a minus. But having obligations and a reputation, the company could not “go to the bottom” and not accept unprofitable orders.

“Another factor influencing the market is cargo taxi drivers. In 2010, the licensing of carriers in the domestic market was canceled, and many small companies, entrepreneurs, and even individuals with any one vehicle entered it. “I sold a cow - I bought a pie” and the carrier already ... Of course, they compete only by dumping, they work at the lowest prices, often violating the deadlines, quality indicators of transportation, ”says the head of MB Courier. But on the whole, business is still profitable and promising, because no matter how the world develops towards digital, goods will always need to be moved from point A to point B.

The potential direction of development, which Roman Zagaysky defines for business, is fulfillment. This is a service that combines the delivery of a product from a manufacturer or supplier to a warehouse, storage, packaging, labeling, and further delivery at a time specified by the customer. This is a rather complicated area, the basis of which is not so much in the availability of resources, but in very expensive and specific software. Now MB Courier is engaged in its development. The entrepreneur predicts the demand for such a service not in the capital (now there are already a number of proposals there), but in the regions, especially those that are close to the borders. Indeed, the sale of goods from Poland, Hungary and less than Romania is the direction of many businesses.

“Now 99% of companies that offer fulfillment have warehouses in Kiev. Imagine what “shoulder” from the warehouse to the customer in Transcarpathia or Bukovina. What will be the delivery at the cost and timing This is both unprofitable and uninteresting for customers. Accordingly, this service will be in demand in the nearest location, so we can talk about it as a free niche in the business that needs to be filled, ”says Roman Zagaysky. By the way, according to him, modern warehouses are another problem and need of the region. Indeed, unlike Kiev or Lviv, Chernivtsi warehouses are old factory or industrial premises, refitted and slightly repaired. It is usually impossible to create proper conditions for good storage there, especially for goods sensitive to temperature, humidity and other conditions. Therefore, the main composition of the company is actually located in Lviv. Local is for local needs.

A significant role in the development of any company has a financial partner. “For four years now we have been using overdrafts and revolving credit lines. We need them to replenish working capital. Indeed, in our business there are conditions such as post-payment, sometimes long, up to 90 days, and this creates cash gaps. Now we are considering the acquisition of new cars under the leasing program, ”the head of the company shares his experience of cooperation.

"MB Courier" during its existence has gone through two crises. Thanks to what, did the company survive and not only remain on the market, but also became one of the leaders in Western Ukraine? “Thanks to flexibility, creativity, the search for innovative approaches. If it is written in the book on your type of business to do so, this means that this path is already ineffective. One should always look for non-standard solutions and alternative services. To provide reference quality of services and reliability, because this is the basis of any business. To be constantly in the trend, to modernize, to seek solutions, technologies and partners that will help you become the best in your field, ”summarizes Roman Zagaysky.