Overcoming logistics challenges in Asia
The latest geopolitical situation is disrupting logistics routes in the East. Martynas Bulovičius, business development manager at international parcel delivery company Venipak says businesses are now increasingly turning to North America.
“The standoff between Beijing and Vilnius related to the Taiwanese representative office, the continuing Russian aggression against Ukraine, and the new outbreak of Covid-19 in densely populated Hong Kong have all forced businesses and logistics companies to look for new markets and new routes to reach them. Businesses are now increasingly turning to North America.
The flow of transport from Asia to Europe through the Middle East has not been disrupted, but there are serious challenges with goods that until recently were transported by aircraft registered in the Russian Federation and through Russian territory.
Unfortunately, the most direct way from China to Europe is through Russia, which means that Russian airlines, aircraft registered in Russia, and the entire Russian territory played a key role in transportation of large quantities of goods from China to Europe. After the elimination of aircraft registered in Russia and Russian airspace, aircraft from Western countries are taking longer routes or flights are being suspended. It is now more difficult to transport goods by aircraft with a capacity below 36 tonnes, which are preferred in our region
The outbreak of Covid-19 in Hong Kong is also a challenge. Chinese authorities have restricted the flow from mainland China and Hong Kong. Since Hong Kong airport is one of the main gates from China, the current situation makes it difficult to transport goods from there. Businesses are now reluctant to use the alternative―railway transport―due to considerable uncertainty as the railway goes through Russia and Belarus.
Despite the current difficulties, we are receiving an increasing number of customer enquiries about logistics opportunities in the direction of North America. This inspires us―businesses are looking for solutions and safer and more stable markets. And we are ready to help them. Despite the challenges encountered in the East, we work globally, and are opening new divisions in Western countries. Overall, our current customer service and goods delivery speed have not changed since the start of the disturbances.
More than just an intermediary
Venipak started providing air transport services last year, and it has already gained consumer trust in this field. The number of Lithuanian importers and exporters that are using Venipak air transport services on a regular basis is continuing to increase.
Our team boasts experienced air transport specialists. We have gained customer trust in this field since the very beginning, and in the first few months, with the pandemic continuing, we were already regularly transporting large amounts of medical goods from China to Poland and the Baltic countries.
The company doesn’t just have air transport partners operating globally, but also opened its first divisions in Lithuania, Poland, and China last year. This year, new divisions will be opened in Latvia and the USA.
We have been discussing air transport opportunities for a long time. We provide express services in the Baltic countries, and our goal is to expand the reach of our operations. Since we want to retain our position in the express delivery segment, transportation by sea or railway is not an option for us. We don’t just want to be intermediaries, so we launched the first Venipak aircraft last year.
The company has set the goal to create its own infrastructure to be able to manage transit times, directions, prices, and quality. According to the expert, the company wanted to be independent of certain popular market solutions that are not beneficial for customers. As we were preparing to become part of ‘real aviation’, we actively analysed the current situation and carefully studied all elements of the supply chain. Before the launch of direct flights, we communicated with representatives from 800 airlines and brokers from 105 countries. We assumed the risk of opening a door to the world that we were not familiar with, and the risk has paid off.
After we approved the flight schedule and notified customers about it, we filled our aircraft with cargo in one day―the interest from customers was huge. We understand that the market needs customised solutions.
E-commerce giants such as AliExpress regularly deliver their goods to the Baltic countries, but their infrastructure is only available for their own needs. It turns out that Venipak’s goal to offer direct flights to everyone, without prior booking and long-term contracts, was a solution that was long-awaited. There had been some attempts to offer this service on the market earlier, but none of them were implemented. The successful start required detailed market analysis and reliable partners, as well as the courage to invest. It was also important to choose the right time to launch the service: the holiday season and the pandemic increased the need for fast delivery of large cargos.
We have strategic partners in most countries. They ensure cargo safety, collect goods from indicated locations, and then transport them to airports. We are highly valued as a parcel delivery company, and we have earned trust in other fields related to goods transportation, too. We are planning further expansion this year. We expect to increase the number of flights to Asia and create a link between Central Europe and the USA. Today, when businesses stand united for the free world, we view it as even more important to contribute and connect continents and facilitate business processes.
Logistics infrastructure creates an advantage
According to estimates from the International Air Transport Association, which we are part of, the volume of cargo transportation by air will increase globally by at least 13 %. This is not surprising if we consider the increasing pace of life and the desire to receive goods here and now―even if our goods are dispatched from a location that is thousands of kilometres away from us. This means that delivery companies that have a wide logistics network and a developed infrastructure will occupy a greater market share.
Venipak is successfully synchronising its logistics infrastructure in the Baltic countries (parcel lockers, pick-up facilities, door-to-door delivery) with its air transport service.
The current trend is that delivery by air is becoming prompter, so businesses need to either expand their warehouse infrastructure or use e-fulfilment services offered by logistics companies. It is forecast that in one year the need for e-fulfilment services around the world will increase by at least 10 %.
Venipak directs a large share of its investments to the development of air transport and e-fulfilment services in the Baltic countries, as well as Poland, Germany, and the Netherlands. The company currently manages a network of 450 parcel lockers in Lithuania and Latvia and plans to expand its network in Estonia this year.”