Spanish market and seasonal demand: a carrier’s perspective

Girteka is one of the biggest players in the Spanish market, loading up to 1,000 full truck loads (FTL) from Spain and Portugal weekly. It is all made possible through a strong distribution network consisting of our own trucks in every region of the country. By the end of 2023, the company will have 1,200 trucks dedicated to the region, with the overall fleet set to grow by 30% this year. But planning transport and meeting the needs of different clients in the Spanish market is no easy feat. Intense competition for a load in this part of Europe and the inevitable seasonal fluctuations pose a challenge for carriers wanting to make the most of the market. Those transport companies that want to succeed here must be flexible, pro-active, and take charge.

Spain is the fifth largest economy in Europe and a major player in international trade. According to an official International Trade Report for 2022, the country’s main exporting sectors include chemical products, capital goods, food, beverages and tobacco, and automotive products. The EU is the main destination, representing more than 60% of total export volumes. France, Germany, Italy, and the UK are Spain’s largest trade partners for exports.

Spain is also the leading EU Member State in terms of fruit and vegetable production. In 2021, Spanish fruit and vegetable exports totalled 13.4 million tons, amounting to €15,600 million. The EU accounted for 81% of all fruit exports and 78% of vegetable exports, according to Fresh Plaza. By regions, Andalusia remains the leading exporter, followed by Valencia, Murcia, and Catalonia, respectively. So how can logistics companies, given that almost 95% of freight in Spain is carried by road, handle such amounts of goods?

What are the market specifics?

What primarily differentiates the Spanish market is its seasonality. While consumption throughout the year is stable, the amount of export depends on the volume of harvest and the frequency of harvesting seasons, resulting in a large cargo imbalance. Depending on the year, the high season for fruits and vegetables begins in October or November, which is particularly fitting, since in winter the demand for citrus fruits, such as mandarins and oranges, skyrockets in Europe. And as there is a large competition among carriers for a load in Spain, all transport operators must be at the top of their game.

The Spanish market is significant by the way it impacts the prices of other Western European markets. For instance, when a big percentage of trucks relocates to Spain, offering bigger capacity, it results in the price going down on this direction. At the same time, those markets where these trucks were previously operating start to feel the shortage (for example, the market Benelux to Italy) and it affects the price on this direction as well.

During the peak season, if the market oversaturates with available trucks, competition for a SPOT load becomes more intense. As the competition among carriers increases, the prices, volumes and requirements for short-notice or SPOT deliveries decrease. This is largely related to the importance of fresh fruits and vegetables being loaded and delivered on time, due to their limited shelf life. Each additional day of delay forces sellers to decrease prices.

Dealing with the Spanish market also involves meeting special execution requirements, such as demand for refrigerated trailers, two-driver trucks for express deliveries, GPS tracking, control towers, and manager availability after office hours. The loadings for fresh produce are usually done in the evening and in the night, at the end of the week and even during weekends, hence 24/7 monitoring by dedicated teams is crucial.

During the peak season, Girteka makes it a priority to send two-driver trucks to transport cargo that has tight transits. Also, during the peak, a great impact of empty kilometres is felt. To be able to satisfy the increase in demand, the company is forced to send vehicles from regions farther away. The main challenge, however, is to effectively load the vehicles that arrive in each region.

“The transit times are intense, regulations regarding drivers’ working hours limit capabilities, delays are not tolerated due to the short shelf life of the produce being transported. This is where the true professionalism and flexibility of carriers shines through,” says Aleksandrs Didenko, Head of Regional Business Unit at Girteka Europe West.

Let us not forget, Spain is a vast country and transport companies must organize their trucks’ flow in a way that there are enough vehicles ready for loading in all parts of the country. Usually, the truck flows are managed and adjusted according to the prices to and from the region. But due to the imbalance, market prices change, and the higher the imbalance – the higher is the difference in seasonal and non-seasonal prices.

With seasonality comes a seasonal pricing approach to match customers’ expectations as much as possible. One group of Girteka’s clients are contract customers who do not have any seasonal fluctuations. For them, a yearly price is usually offered. The second group is customers to whom two prices are offered: one for summer and one for winter. The third group are fruits and vegetables producers who are willing to have their contractual prices set quarterly. Overall, the market requires a flexible tendering approach for all customers’ segments for Spain exports.

Coping with high and low seasons

Customers who have seasons in their produce and shipping quantities, form quite a big share of Girteka’s portfolio. In Q4 of 2022 the company’s fresh produce share in total amount of carried shipments was 23%. This latest high season, however, was different in terms of the start date and expected volumes. A number of factors could have impacted the situation, including severe droughts experienced in Western Europe this summer that would have affected harvests, as well as changing consumer behaviour in light of rising inflation and an anticipated recession in the EU.

When working with fruits and vegetables, it is important to know that the production fluctuates according to weather conditions. This means that the capacity of production varies significantly, demanding more flexibility and adaptation in terms of the fleet. Both producers and logistics companies must have in mind the changes in cargo volume, loading places and loading time.

“The biggest challenge – to be able to timely react to the market and the clients’ needs, which can change weekly. Hence, clients seek flexibility and efficient problem solving by their chosen transport providers,” says Mr. Didenko.

During the low season, transport operators must still be able to find and deliver non-seasonal cargo in order to stay afloat. Although non-seasonal contracts are hard to attain, Girteka has managed to build a substantial portfolio of such customers in recent years, carrying goods like confectioneries or beverages out of the rest of Europe to Spain.

For these clients, Girteka offers various types of trailers for different types of goods. Box trailers are suitable for the transportation of palletized dry and non-temperature sensitive goods, as well as high-value cargo. To transport the latter, the company uses trailers equipped with locks that meet TAPA level 1 safety requirements. For pharmaceutical products, Good Distribution Practice (GDP) compliant fleet is deployed. There is also the possibility to transport other produce which can be loaded from the back of the trailer.

From the perspective of a manufacturer, farmer, or even an e-commerce business, planning for capacity needs to be done already prior to a peak season. As the largest asset-based company in Europe and a leading FTL provider, Girteka has over 9,000 trucks and 9,800 trailers in its fleet and is capable of providing enough capacity even during the high season, including customer-tailored solutions, offering an optimal trailer selection and standby trailers if necessary.

When it comes to products such as fresh fruits and vegetables, at Girteka, the entire cold chain is handled from end-to-end: the company owns and operates both the truck and the trailer, and manages the whole comprehensive logistics process. The refrigerator trailers have cooling equipment that ranges from -25°C to +25°C and are thermally calibrated annually. The temperature is monitored from pick-up to delivery, allowing to stabilise temperature and humidity conditions if necessary, ensuring proper transportation of perishable produce.

“We are one of the biggest BOX/Reefer operators in Spain, with year-round stable volumes, able to be flexible and participate strongly in the fruit season, without disrupting our agreements with non-seasonal customers,” summarizes Mr. Didenko.

Sustainable solutions and future opportunities

For Girteka, Spain is not only the biggest market but also one with the largest amount of shipments carried by intermodal rail transport. Increasingly, contracts with clients include requirements for CO2 emissions reduction. Some customers specify a certain number of deliveries to be made particularly by way of intermodal transport. At the same time, the company is also in agreement with the train operators, who themselves require a certain number of trailers to be provided yearly.

“Since we began our intermodal services in 2017, we have become the largest reefer carrier offering intermodal services to and from Spain, and our mindset is to continue to grow in this area, providing quality sustainable services to all our clients,” says Mr. Didenko.

During the peak season, intermodal rail services are used more intensively in order to transport even more cargo. In 2022, Girteka carried a total of 16,555 shipments by intermodal transport. Out of these, 12,000 were transported from Spain on two main lines. By carrying cargo with intermodal transport, in partnership with Lorry Rail and VIIA Rail Motorways, Girteka reduced its carbon footprint by over 12 million kg of CO2 in 2022.

This year, the company plans to ship even more – a total of 13,500 trailers – to the Spanish market. This will be made possible with the renewed opportunity to carry cargo from Spain directly to Poland. Starting January, the company has extended its line from Le Boulou (France) through Bettembourg (Luxembourg) to Poznan (Poland). Now, for clients who export or import from Poland, the company can offer an even longer distance by rail and save even more CO2 emissions.

Girteka’s biggest delivery hubs in Spain are the Madrid and Barcelona area. Typically, a truck loads in the southern or western part of Spain and, when passing Barcelona, mounts the trailer onto a train, picking up a new one instead at the terminal loaded with new cargo for Spain. In other words, while the cargo is being carried by rail, we can pick up new cargo, thus, offering extra capacity and ability to transport larger loads faster.

In general, the company is present in all areas of Spain and Portugal, with regular truck flow in La Coruna area (port city in Spain). Despite the already established strong presence in this market, Girteka has plans of further growth for both its intermodal and road freight services in the region.