Last summer, Girteka Group announced a landmark change in its management structure that saw Jeroen Eijsink, former President of C.H. Robinson Europe, take over the role as CEO, replacing Edvardas Liachovičius, who had held the position since 2008.
While Liachovičius continues serving as a board member and remains one of the Group’s two main shareholders, alongside Mindaugas Raila, the appointment of Eijsink as CEO was a significant milestone for Girteka Group. Notably, this was the first instance that the company had selected a CEO from outside both its organization and the country of its origin.
Since last summer’s announcement and Eijsink assuming his new role on August the 1st, 2023, there was no shortage of curiosity within the industry about what the appointment of the new CEO could mean for Girteka’s future direction.
To satisfy this curiosity, we sat down with Eijsink to discuss a range of pressing topics. During our discussion, we talked about his decision to join Girteka, the qualities that the company found compelling in him, the company’s roadmap for decarbonisation, and Girteka’s investment in driver recruitment bases in Central Asia.
Additionally, we explored key developments in European overland transportation, including the limitations of intermodal logistics, the comparison between digital and traditional forwarding services, and reasons why some haulage companies are considering downsizing their fleets.
Why Did Eijsink Take on the Role of CEO, and Which of His Traits Does Girteka Value Most?
First and foremost, what qualities does Girteka see in Eijsink, and what persuaded him to come to Lithuania and take over the reins of the Lithuanian logistics giant?
When it comes to the latter, Eijsink shared with Trans.INFO his admiration for Girteka’s ability to maintain a consistent double-digit growth. The new Girteka CEO also expressed his excitement about taking on the challenge of sustaining the company’s growth trajectory.
Moreover, the former President of C.H. Robinson Europe stated he was impressed by the dynamic energy and spirit of entrepreneurship that he had witnessed both at Girteka and in Lithuania overall. Another significant factor that appealed to Eijsink was the opportunity to be the CEO of a major company with only two shareholders.
“It is a different dynamic,” Girteka’s new CEO told Trans.INFO. “Especially compared to working in a stock listed company where you obviously must deal with governances and boards. The speed of decision-making and the entrepreneurial spirit here is something I have always been attracted to,” he added.
How does Girteka stand to gain from Eijsink’s experience and motivation? To that question, Eijsink responded:
“I can help to ensure that the organisational structure, processes, and IT all grow at the same pace while upholding the company’s foundational stability. I have the experience for that, and I believe my strength lies in strategic thinking and commercial acumen. I can help to identify opportunities for further expansion and in crafting the trajectory for the next phase of growth.”
Eijsink continued:
“Girteka has evolved from being a local Lithuanian carrier to a more international company. I believe my ability to attract international talent aligns with Girteka’s objectives in appointing me.”
Photo: Girteka press materials
“Responsible Logistics” and How Girteka Will Conduct Itself Under Eijsink’s Leadership
How does Eijsink interpret Girteka’s notion of “Responsible Logistics”, and how will this shape how the company conducts itself under Eijsink’s leadership?
In response to this, Eijsink told Trans.INFO that the change was required due to Girteka having scaled up so much that its scope of responsibility had increased dramatically.
“We are one of the leading carriers in Europe, therefore, we also carry a totally different responsibility within supply chains. We now have a much greater responsibility towards our customers and that was one of the trigger points that brought about this change,” Eijsink said.
Eijsink maintains that Girteka’s “Responsible Logistics” identity is “not just a message that is presented externally with slogans”. In his view, the message also shapes matters internally at Girteka and demonstrates to staff that Girteka is “now a different company”.
“Girteka has not just changed its logo. In the last two years we have moved to our new state-of-the-art headquarters here in Vilnius. We have also invested heavily in IT by contracting SAP as our prime software provider for all our operational processes. We have taken a big step up in professionalisation, and the term ‘Responsible Logistics’ encapsulates that,” Eijsink added.
What is Girteka’s Roadmap Towards Zero-Emission Transport?
Although Girteka has been testing battery-electric trucks and has made significant investments in trucks that run on HVO fuel or LNG, the company is yet to make any electric truck orders on a significant scale.
Taking this into account, what is Girteka’s roadmap for its transition to a zero-emission fleet? In Eijsink’s opinion, the period around 2030 is when the ball will really start rolling.
“Firstly, you need to have technical alternatives available. It is clear that the partners and OEMs we work closely with are expanding electric vehicle portfolio in their service offerings. The issue is that, at the moment, these vehicles are pretty much only economically and technically productive on short distance routes. So up until 2030, it is very likely that electric trucks will be predominantly deployed on relatively short distance routes,” Girteka’s CEO told Trans.INFO.
That may be all well and good for 2030 or so, but what about the here and now? After all, 2030 is still some six years away. In response to that, Eijsink emphasized Girteka’s use of HVO fuel, the fact that its fleet adheres to high emission standards due to being procured in the last few years, and the company’s continuing trial tests of zero-emission trucks.
“In the meantime, we are using HVO as a bridging technology. It is not endlessly scalable as it stems from natural products that occupy land and could be used for food among other things. However, it does help in the short term. We are also working with truck manufacturers on all kinds of trials, involving both electric and hydrogen solutions. We are testing equipment to see what the requirements and dynamics are and so on,” Eijsink told Trans.INFO.
Is this enough? Couldn’t Girteka immediately invest in many more electric HGVs? Eijsink maintains that it is not that simple:
“The metrics and the productivity of a zero-emission fleet is not proven, and therefore the investment risk, both on us as a carrier, as well as on the customer’s side, is substantial. Moreover, there is not a lot of support from the government’s side. Yes, you can perform tests, and there are some mechanisms and schemes available in certain countries. Even so, there is no general supporting function. Sometimes I have the feeling that it is basically everybody looking at the carriers and saying: “Well, you have these battery-electric vehicles available, why don’t you buy them.’ It takes a little bit more than that.”
Looking farther ahead, what changes will we begin to see after that turning point around the year 2030?
According to Eijsink, this is when we should start seeing alternatively powered trucks able to cover longer distances become increasingly available. Consequently, Eijsink also expects that the EU will implement a CO2 pricing mechanism that will discourage the use of carbon-based fuel while also incentivising greener alternatives.
Moreover, Eijsink believes that in the next five to six years, there will be more clarity about the infrastructure needed in Europe for either electric charging or hydrogen refuelling. “That will in turn change the economic dynamics of the whole thing,” he said.
Photo: Girteka press materials
The Constraints Holding Back the Modal Shift from Rail to Road
Besides the switch to zero-emission road transport and increasing the use of trucks that run on low-emission fuels, other main means by which major logistics operators can cut emissions is by embracing intermodal transport.
When it comes to increasing modal shift to rail, Eijsink told Trans.INFO:
“As an industry, we will continue to transition from road to rail, although rail capacity is not endlessly scalable. So, while there is opportunity out there that we are keen to take advantage of, it is a slow scaling alternative. It will never entirely replace our road operations as capacity is constrained in the European market.”
On a more positive note, Eijsink does believe there is scope within the current infrastructure to move more cargo by rail. He was also keen to point out that Girteka believes in intermodal freight and is investing in it. “We are opening up more routes and moving more cargo by rail transport. It makes sense for many reasons,” Eijsink said.
According to Eijsink, the main barriers to the transition are operational constraints that are impacting the delivery times negotiated with customers.
“If you look at the market share of intermodal freight over the last 10 years, and you know that international long-distance trucking has grown by 3-4% a year since the pandemic, then you can see that intermodal rail transport has barely held up its market share in line with that growth. Although we are utilising the infrastructure better, there is still room for improvement. There is an ambitious EU infrastructure plan for investment in 15 corridors. Progress is nonetheless slow, so we cannot really see a marked change in rail freight market share,” Eijsink told Trans.INFO.
The new Girteka CEO highlighted that we will not see that marked change in market share until new infrastructure becomes available:
“When you think about reliability, scalability, and the bigger picture in general, intermodal will not be sufficient to deal with emissions challenges. Quite simply, we will not see enough of a change in intermodal rail transport market share until these infrastructure projects have been completed. Intermodal really needs significant investment. This is tough, because the routes span various countries and can go across the backyards of people who may oppose the plans.”
Why Girteka Went to Great Lengths to Set up Two Driver Recruitment Bases in Central Asia
Meanwhile, aside from the drive to cut road transport emissions, the highly publicised issue of driver shortage is another challenge that Girteka and its competitors are having to deal with.
As has been well documented, Russia’s invasion of Ukraine made it tougher to retain and recruit drivers from Ukraine as well as Belarus and Russia. This made the already noticeable shortage across Europe even worse, prompting many haulage firms to remedy their vacant driver positions by turning their attention to more exotic countries.
Many have done this via third party driver recruitment agencies, some of which have really grown in prominence of late. Girteka, however, has decided to go its own way and establish two driver training bases in Kazakhstan and Kyrgyzstan.
Naturally, such an undertaking involves considerable financial investment as well as time and effort. So why has the company opted to go down this route? According to Eijsink, the sheer size of Girteka’s fleet necessitates a robust labour supply chain, which makes the investment in these bases worthwhile.
“We currently have around 14,000 drivers on our payroll. When you consider growth and churn, you can imagine how many drivers we need to onboard every week, month, and year to satisfy our customers’ demand. If you are reliant on third parties in far-fledged countries for recruitment at this scale, the process will definitely be challenging,” Eijsink said.
Eijsink did concede that the use of driver agencies does make sense for small and medium sized companies. However, he also maintained that Girteka sees the value in being able to control its recruitment processes from start to finish.
“For medium sized and smaller players, it would be much tougher to have those resources on the ground. They have little choice but to rely on third parties. We nonetheless believe we need to control the recruitment and training processes. We do not want to rely on third party agents. Being present with our own resources on the ground helps us to conduct the whole process properly. We can do some of the training locally without having to take the drivers to Europe in the first place. This reduces costs and is less of a hassle for the drivers themselves,” Eijsink told Trans.INFO.
Eijsink also claimed that Girteka’s in-house recruitment process could be more advantageous to drivers than some agencies offer:
“We often do not know what these third-party agents are actually charging the drivers who wish to be considered for a position. So it is a win-win to have your own recruitment base on the ground in that sense. There is a lot of discussion around the treatment of drivers nowadays, so being a responsible employer is obviously important. Controlling that supply chain, so to speak, is crucial to our strategy.”
Given that Europe’s driver shortage is set to continue and possibly even worsen, it perhaps is no surprise to learn that Girteka is looking into the possibility of extending its recruitment activities to other Asian countries.
“We are exploring our options elsewhere in the region. The Central Asian countries make sense given their historical backdrop as CIS States where the Russian language is common, as it is on post-Soviet countries. We are also looking into other countries like India and Pakistan and could go further if we feel there is a right opportunity for us. We will also need to invest in our infrastructure there in order to control that labour supply chain. This is a declared goal,” Eijsink said.
Photo: Girteka press materials
“In the long term, the balance of power will shift to asset-based companies.”
At the very start of our discussion, when Eijsink explained his reasons for joining Girteka, he also stated his belief that “in the long term, the balance of power in the industry will shift to asset-based players”. Naturally, we pressed him on why he believes this to be the case.
In Eijsink’s opinion, driver and capacity shortages, as well as the rising costs of assets and associated infrastructure during the green transition, will be factors that eventually bring asset-based players to the fore.
“We have a shortage of drivers, and although people unsurprisingly tend to forget about it in the current economic climate, it only takes a very limited amount of expected economic growth to create a substantial driver shortage, and, consequently, a capacity shortage. In addition, the investments in assets, such as equipment, are becoming increasingly expensive. Climate neutral solutions too. You also need to think about the accompanying infrastructure, whether that is charging infrastructure or something else,” Girteka’s CEO told Trans.INFO.
Eijsink added that although the industry may still be fragmented, Girteka’s assets, including a fleet of 7,000 trucks, makes it a relevant player that can interact directly with shippers – something that will become even more important over time. Eijsink was nevertheless also keen to point out that there will always be a place for forwarders.
“Our customers do not want to deal with an endless number of suppliers. They want to get the best price and avoid high procedural costs at the same time. These customers need market players that can help them access efficient capacity without having to interact with each and every one of the suppliers and have that flexibility as well. So, there is a place for freight forwarding partners, and we work with some of them for cargo that is not transported via our own fleet.”
Why People, not Just Technology, Are the Key to Success in Forwarding
Given Eijsink’s belief that asset-based players will have a strong position in the future, what are his thoughts on the rather divisive digital vs traditional freight forwarding debate that has been raging for some time now?
Referring to some of the financial struggles that a few digital logistics startups have had over the last year or so, Eijsink told Trans.INFO:
“When it comes to the debate over digital and traditional, I think that traditional forwarding started as a people-driven business. There were well-known dispatchers that knew customers, that knew the carriers. They had this artistry and magic to combine both and find the best possible option for their customers, often in a transparent marketplace. Then, all these digital tools came up and some companies thought that they could basically replace all that with technology alone.”
Elaborating further, Eijsink shed light on the sheer complexity involved in the quest to implement widespread automation in the forwarding sector:
“There was something of an awakening that traditional freight forwarding involves an immense number of variables. There is a lot of interaction with customers and 10-15 little decisions to be made with every load. It is very difficult to automate it all at once; there is a long journey ahead with this. Automating all of that in a very volatile environment is tough. So, aside of the help technology undoubtedly provides, you still need good planners and dispatchers.”
Moreover, Girteka’s new CEO said that the premise of some business models has been hit by the realisation that they need many more people than originally envisaged:
“Let’s take the idea where you have a tech model and plead investors for money upfront because every load will be a profit contributor and you will not have to scale up with people, as once it has been programmed it is finished. I do not think that is working. What you can see is that some of these digital forwarders still have to employ a vast number of planners and dispatchers, and customer service people and so on. That was not supposed to be the case when their first valuation was made and they received funding from their investors.”
Eijsink continued:
“Inevitably, a point in the market cycle will be reached that puts results under pressure, which is what has been observed in the USA. You may have also seen one or two companies here in Europe that are struggling, because this is still a people-intense business. Although technology helps a lot, it will not replace people. Therefore, your cost base needs to be ready to carry that. Perhaps some did not plan for this and it could be the reason why we are seeing these problems.”
The Girteka CEO then warned that despite the power of AI to improve productivity, the technology will not be a replacement for everything:
“We invest vast amounts of money into technology to help our people. I do not believe you can replace a large part of the people, and I also did not believe that in my previous role working on the forwarding side. I think there are too many unknowns in our industry that you cannot just simply replace by artificial intelligence. Will it help? For sure. Can we improve productivity? Yes, massively. But it will not be a replacement for everything, and I think that people need to recalibrate their financial models.”
Capacity is Leaving the Market, and the Consequences Will Come to Roost Once Europe’s Economy Picks Up
Finally, we turned our attention to the road transport market, particularly – the battles being fought by smaller players, and the extent to which we could see more bankruptcies or downsizing.
The UK in particular has seen a worrying rise in the amount of haulage companies entering administration, with some even suffering their fate during peak season.
This was no news to Eijsink, who stressed that trucking capacity across Europe has been on the wane for the last four to five years:
“We need to be clear that since the middle of 2019, when the digital tachograph rules were fully implemented, Europe has lost trucking capacity consistently. You can see that if you look at new truck registration and driver numbers,” Girteka’s CEO said.
Eijsink is also of the belief that the economic slowdown we are experiencing right now means this loss in capacity somewhat hides the severity of the situation:
“When I talk to customers, I realise that the current market situation may give the impression that capacity is in abundance. Looking further, we could see a little bit of growth as soon as Christmas this year. If there were to be an economic recovery of 0.5% GDP growth or more in two consecutive quarters, you would certainly see a shortage of capacity coming towards us rapidly.”
Why are we seeing this loss in capacity then? According to the Girteka CEO, it is not so much a case of trucking companies dramatically going out of business, but rather downsizing or winding down their activities:
“If you play the game of trying to cut transportation costs by pushing down rates at a time when the industry is having high-cost pressures on their own, there will be stress on capacity. When you think about the impact of new regulations and take into account driver wages and driver shortages, as well as rising equipment costs and emission requirements, it comes as no surprise that some companies are not investing in their fleet or renewing leases. Hence, they may just gradually slow things down. Hauliers might decide that instead of 50 trucks, they are happy with 40 or 35.”
The reason for this sobering trend is of course the pressures being placed on the road transport industry. Eijsink warned that the downsizing of SME hauliers, and the loss of capacity that comes with it, will make “just-in-time” supply chains especially difficult.
“We really need to realise that the industry is being put under tremendous pressure. Yes, 2022 was a good year because the market was in our favour, but that is no longer the case. Structurally, we are seeing capacity leave the market. I expect this to continue, so there will certainly be an awakening if we see an economic recovery. That is what we should all be worried about, because at some point, it will just be tougher to get our product on the shelves in a just-in-time manner like we have been used to,” Eijsink concluded.