Upswing gets transport and forwarding wheels turning

Economic fluctuations are seen rapidly in Itella Logistics Centre

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Since Midsummer, the number of packages going in and out of the logistics centre run by Itella in Vantaa has been higher than anybody could have hoped, says Jarmo Halonen, Country Manager of Itella Logistics, one of three divisions - Mail Communication, Information, and Logistics - of the former Finland Post.
     
Any changes in Finnish production or export figures will automatically and immediately be seen in Itella’s Logistics Centre, which handles roughly 80% of all parcel deliveries in Finland. In practice, this means some 86,000 packages per day and 22 million a year.
      ”Especially July was a positive surprise for everybody in all sectors. For example, last year’s bargain sales were huge, but this summer, some retailers even suffered from a shortage of campaign products”, Halonen notes.
     
Particularly responsive to business cycles are domestic deliveries. They have increased at a pace of more than 10 per cent over the past weeks. Certain export destinations have experienced an increase of as much as 25%.
      ”Last year was extremely difficult. The drop experienced in January was so steep that nobody could predict it in advance”, Halonen says.
      The net sales of Itella Logistics declined by 12 per cent, pushing the result into the red.
      ”We cannot sigh with relief yet, but we are definitely heading towards a more normal level of earnings. If no major upheavals occur, the upcoming autumn will be reasonably good”, says Halonen with some caution.
      In any case, in the Logistics Centre one comes into close and personal contact with the everyday life of Finns. In an area of nearly ten hectares, a quite jaw-dropping quantity of goods of all kinds are stacked on shelves around ten metres in height, ranging from toothpaste to plastic buckets, washing machines, bicycles, and spare parts.
     
Today, goods are no longer stored on companies’ own shelves, but the logistics company handles the entire supply chain against a payment.
      In practice, if a Finnish clothing retailer purchases for example dresses from manufacturers in China, Itella’s logistics centre in Vladivostok will cover all freight transportation to Finland, take possible wrinkles out of the clothes, repack them, put alarm tags on where necessary, and take the garment racks to the store.
      The ordinary consumer sees only the results of work done by Itella’s Vantaa centre every day at their supermarket, when he or she is looking at the sales display racks of rice packets or bins of shampoo bottles.
      It is quite possible that all these racks and bins have been put together and completed in the logistics centre, while the retail outlet itself is able to follow online where the merchandise it has ordered is at that particular moment.
     
As far as Itella is concerned, this kind or comprehensive service logistics that covers the entire supply chain is good, as it reduces the company’s responsiveness to business fluctuations, while its customers do not need to worry about their inventories.
      Moreover, on the customers’ balance sheets all fixed costs become variable costs, as they no longer have to keep warehouse stocks of their own.
      Some 40 per cent of the nearly EUR 2 billion turnover of the state-owned Itella Group comes from service logistics, in other words from transportation, forwarding, and warehousing and related services.
      In 2003, the sales volume of Itella’s logistics services was around EUR 240 million, while today, it is approximately EUR 800 million. The division has 43 warehouses in eight countries, with the largest of them in Vantaa.


Previously in HS International Edition:
  Paper industry order-books back to pre-downturn levels (13.8.2010)
  Oxford Economics: Finnish economic growth among strongest in eurozone to 2014 (6.5.2010)

See also:
  Itella to begin opening letters and delivering them via email (31.3.2010)
  Over-75s will get their mail delivered to front door after all (29.1.2010)

Links:
  Itella Logistics
  Itella (Wikipedia)

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