The past two years have been momentous for traditional freight forwarding companies. Be it the pandemic or the changes within the logistics industry, a new curveball has arrived every few weeks. To speak about these issues and more, we interviewed Fleteval Forwarding, a member of the New Silk Road Network from Spain.
In the article, we speak with Jose Alcolea, the Assistant Manager of Fleteval Forwarding, about the company carving a niche within the paper products sector, navigating through the ups and downs within the industry, the challenges with rail freight in the Spanish market and finally their charitable ventures. Since their establishment in 2008, Fleteval Forwarding has grown into a successful enterprise with an experienced team that provide quality services to their clients.
In conversation with Mr. Alcolea…
NSRN: Fleteval Forwarding specializes primarily in maritime transport and logistics and has successfully created a space in this highly competitive market. The company was established in 2008, and since then, it has gained the ability to cover various import and export markets. What has been the journey so far for the company? And how did you carve a niche for yourself in a highly competitive space like sea freight?
Jose: It was an exciting journey since 2008. We were established in the environment of the previous global financial crisis, so financing was a concern initially. Fortunately, clients have supported Fleteval Forwarding since the very first day. We also received a lot of support from carriers to Vicente Ferrer, our sole owner today. That made things a little bit easier. The company started on the 1st of July, 2008 and only a month later we were unstuffing containers with paper in Valencia. It was pretty quick! Vicente had the expertise from before, so everything worked out smoothly. Even though he was not planning to have that special focus on the paper market, it came along naturally. We have two companies in our group, one is our sister company that is running the warehouse, and in total, we have 40 staff members.
Yes, the market is very competitive. We must work in several directions to keep the market running and keeping the client happy. Apart from our clients, we have also kept good relationships with the carriers, which has been beneficial especially these days. We make sure to regularly meet our carriers and service providers because it is critical to us. Obviously, our team is also essential to us. I always remind them, the one thing that we have that the rest don't is ourselves. It's our biggest strength. We are medium-sized, and we constantly compete with the bigger players. They may have the financing and other tools, but lack the determination and the will to work through challenges.
NSRN: What are the key opportunities and challenges within the Spanish logistics market? What would typically be the main imports and exports for the country? And how do you leverage these markets?
Jose: What we have seen from competition is investments in logistics areas (warehouses). They are also noticing the profit they can make on freight rates is also limited. In the past years, there have been wretched freight rates. It looks like they might feel that the extra profit will come from logistics and deliveries, so I think there is an interest in investing in new areas.
Fleteval Forwarding mainly deals with pulp and paper. Waste paper export is also a market for us, including plastic scraps. Other than that, we deal with Freight All Kinds (FAK). We also do plastic furniture from China into Spain for some retailers too and exports of prime paper and more. Basically, anything you can imagine!
NSRN: Evidently you are very strong in the paper, forestry, and waste products sectors. What are the nuances of handling the logistics for these commodities? How have these industries reacted and developed since the beginning of the pandemic?
Jose: I'm not sure if it is the same in other countries, but everything related to the transport and logistics of pulp and paper was considered basic needs in Spain, so it never stopped. This is also because the link we have with paper was related to food and pharma packaging. Since they were also some key sectors, they were not disrupted. The only difficulty was that every single shop was closed, there was no waste paper to collect, and this hit some of our clients businesses.
While handling pulp and paper, we need different machinery; we need more powerful forklifts and cranes. Those who handle forklifts know that one ton is the regular weight that can be carried, but with paper, up to four tons must be carried. We need powerful machinery, and we need more machinery than other warehouses because, for certain kinds of reels, we need to have two machines available simultaneously. It may look complicated to someone who is not familiar with this, but for us, it is easy. At the end of the day, you can easily stuff one container with paper in 20 mins, because there are nine or ten reels, and this also makes the job very efficient. Basically, with a few people, we can handle a large number of containers every day.
The pandemic, of course, caused a massive imbalance of containers worldwide and pumped the volumes of e-commerce. Our traditional markets have been countries producing paper, such as the US. However, they are struggling to ship out as much paper as they would in the past days. So, from that point of view, we have been affected a little bit. We think this will change by Easter next year, but in the meantime, we need a way to balance that. As I said, we grew a lot on exports with movements you would not expect, for example, recycled paper being shipped to Mexico. Mexico is clearly a neighbour of the US and an alternative at the moment.
NSRN: From our understanding, you have been a part of Fleteval Forwarding for 6 years now. Currently, you shoulder the duties and responsibilities of being the Assistant Manager. What does your day-to-day work involve? What are some of the exciting projects that you were a part of in Fleteval?
Jose: I joined the company in 2014, and in October, it will be seven years since working here. As the Assistant Manager, which sounds fancier than what it is, my job involves a bit of everything and a lot of certain things. My role is very focused on sales and development of new business, which is very satisfying. At the same time, I must take care of my staff when it comes to personal needs. My job profile is very extensive, but I still make sure to find 10 mins even when I am really busy to deal with these matters.
I help with procurement, agents, networks, and I also make bookings from time to time, especially during the summer vacation times. Overall, my job keeps me very happy. It also gives me the opportunity to get involved every time we set up a new business; we must find a new depot or service provider, which is critical to developing our business.
NSRN: Fleteval Forwarding has extensive business with the Far East. Rail connections between Europe and China have been a hot topic in the past years. Spain, in particular, has connections such as that from Yiwu to Madrid. However, we know that rail and intermodal is somewhat new for Fleteval, as for many other companies. What do you think are the critical aspects to recognize while growing your capabilities in this sector? Do you see/hear a lot of demand from customers for this service? What challenges and opportunities do you think there are for Fleteval with this trend?
Jose: As you say, we are not very familiar with rail freight. I understand that there are dedicated trains for big retailers consigned to one single customs agent in Madrid. Our experience is that freight rates are higher in rail than in the ocean. Interestingly, only today, there seems to be a window for importers because the spike rates are higher than ocean freight rates which are already very high. However, some carriers are open for negotiation for the allocation of services which starts with ocean services from the Far East into Spain, then linked to rail run terminals within Spain. At the moment, we have a project to import solar panels from the Far East. CMA, for instance, told us, 'Look, the only way we can take the volume is if the service is combined with rail towards an inner terminal in Spain.' But I think that will be hard because the rates for 40'HC show $15000, and these are $18000.
Maybe in the future, with growing climate change, there will be a higher need for rail freight. Still, at the end of the day, the network in Spain is not strong enough since rail infrastructure is not even finished from the south to the north of Spain. There is also an infrastructure problem from South Mediterranean to Northern Mediterranean, as it is not yet completed. Spain relies on trucking heavily, especially when it comes to the delivery of agricultural produce from the south of Spain into Central and Northern Europe.
NSRN: We noticed from your website and LinkedIn profile that Fleteval Forwarding is very passionate about charitable causes, such as your collaboration with the Vicente Ferrer Foundation and your advocation for cancer awareness. Can you tell us some more about the company's efforts in this arena? What was the main reason for selecting these two initiatives?
Jose: We are very proud and happy that our owner gives money every year to different projects. This foundation is linked closely to Valencia, as Vicente Ferrer (who also shares the same name with our owner) was a Jesuit priest from our region who moved to India and engaged in charitable activities. The foundation works in poverty-stricken areas in India. Their projects generally focus on providing women from lower economic classes more financial independence. For example, the Foundation built houses that were then put under women's names, as they are more prone to problems in case of domestic disputes. They also provide bicycles to women to go to university or colleges. Some of the projects are also dedicated to poor people with disabilities.
We had a colleague who sadly passed away after fighting cancer for three to four years. Unfortunately, this illness is present in our lives throughout various countries. Here we try to make it visible and make people aware of it. We were really hoping that our colleague would join us back, but this sad piece of news arrived three weeks ago. This has increased our commitment to this cause.
NSRN: The logistics industry is quite chaotic with all sorts of rate, equipment and space issues. What is your outlook for the industry for the next year?
Jose: It is difficult to say because most of the information we receive is from carriers, which contains their own interest as well. In our meetings with the carriers, they are saying that they expect the whole of next year to be the way it is now. We want to be a bit more optimistic and say that by summer, it might improve, but definitely not before that. With the golden week and the Chinese New Year, the situation is very complicated as 50 vessels are waiting at Long Beach, USA.
In India, the situation is worse than in China today. Inventories in the US are below the figures before the pandemic, so they will keep pushing in the next few months. We really don't think it will become significantly better by next summer. However, even by then, we don't expect the rates to be better. This week we had the rates for import from Far East extended for next month, but they are the highest ever. Maybe we won't see them increasing, but at the same time, these rates are very high! At best, they might drop to $10000, but for sure, they will not get back to the pre-pandemic phase.
We have heard that the US Federal Maritime Commission (FMC) is monitoring the situation, and some retailers are raising claims in courts, so maybe Europe will also take action soon. This is mainly because there are still blank sailings even when there is loads of cargo, so some carriers might not be fulfilling their contracts with their clients. If action is not taken, it will contribute towards inflation, affecting prices, especially energy. Freight rates impact global trade, so it will affect us all at the end of the day. There needs to be more trust between forwarders and carriers. There are only a few carriers in total, so we need to maintain relationships with them and keep them happy because the clients need their cargo shipped at the end of the day. But thankfully, our clients have picked us and supported us through these two years because, at the end of the day, they understand these problems too.