With the COVID-19 pandemic continuing to transform their operating environment, road transport companies are having to swiftly adapt their strategies.
The Hegelmann Group, founded in 1998 in Germany, is a family run business providing a wide range of logistics services around the world with 4,000 trucks and 5,200 drivers.
We spoke to Siegfried Hegelmann, its managing shareholder, and a speaker at IRU’s recent RoadMasters Forum, for his insight and advice on how road transport firms can deal with these challenges.
How did the pandemic affect your business, and what changes have you made?
Our company strategy over the past five years has focused on growth and scalability. We recently calculated that our group has grown by about 1,200% over the last 10 years, with the highest growth during the last four years.
The pandemic however has led to a dramatic reduction in sales activities. But it was a good time for reflection, and the whole team, including our shareholders, started thinking about how we could further develop the company without sales growth. As a result, we made some significant changes to our strategy.
Given the market uncertainty, we decided to pause our growth strategy and introduce a new management system, switching our focus to improving our business processes, evaluating our existing competencies and disseminating best practices throughout the whole group.
Without COVID-19, we would have grown our fleet to a maximum, but this would have led to even greater operational inefficiencies. The pandemic offered the best reorganisation opportunity that we have ever had.
Before the pandemic, nobody in our company would have supported me had I suggested pausing growth to reflect on processes. Hegelmann Group has managed to make the best of a difficult situation.
Even though we have seen market uncertainty, we will be twice as strong, with this new vision, once the pandemic is over.
"The pandemic offered the best reorganisation opportunity that we have ever had."
How was the Hegelmann Group able to be so agile?
One advantage has been the company’s young leadership. The generational shift towards younger management happened naturally within the Hegelmann family some ten years ago. We made this change at the right time, as many family companies struggle with this generational change. The old leadership brings experience, but young leadership is better able to react to change.
In addition, while many of our competitors focus on specific transport niches, we prefer to diversify our services. While it is easier to be more efficient if you focus on one area, it prevents you from experimenting.
What kind of services have you developed?
Currently we work with bulk transport, vans and tilt vehicles. We also organise intermodal transport, so we are less dependent on certain customers and services.
We have developed new services in addition to our core business, including a network of vehicle maintenance services, a chain of hotels for our drivers, and ferry ticketing services.
At Hegelmann, we prefer testing new avenues and then deciding on business directions based on results. We understand our business better than anyone else does, and this helps us to develop great value propositions for our new additional services. First, we provide a service to our own staff and then, if it is successful, we take it to market.
What is unique about Hegelmann is that we are both a family business and a large enterprise. With offices in various countries, we are a multinational organisation. You have to be big enough to invest in new services and make them scalable.
"At Hegelmann, we prefer testing new avenues and then deciding on business directions based on results"
What has this required from your team?
We encourage our managers to think outside of the box, to allow business strategies to evolve. We let their ideas grow and we do not restrict them with a heavy focus on strategy, extremely structured job descriptions or taking full control over their activities. Hegelmann is a laboratory for business experiments.
How has the COVID-19 pandemic changed the industry?
The main burden of the pandemic has been on drivers. There has been limited accommodation available and roadside facilities have been closed. Drivers’ activities have dramatically changed and they do not know when they will be able to go home again.
Some drivers are also unsure that they will be paid for their work, as their employers may go out of business.
At the same time, the current situation requires their full mobilisation and high performance, as drivers have to maintain the same level of quality while working in extremely difficult conditions.
Where is your current focus in driver management?
The crisis has shown us that we need to place greater importance on our drivers. This should not only be our position, but a step-change in thinking for society as a whole.
We are heavily investing in COVID-19 risk prevention for drivers and are applying additional protective measures and internal procedures. We are also organising healthy driver campaigns, with doctors giving advice on lifestyle adjustments.
Digitalisation of the driver’s workflow is a part of our new strategy, which aims to increase visibility of driver performance and simplify daily operations. We have also started producing internal communication videos for our drivers. This enables us to communicate with thousands of employees when in-person engagement is not possible.
The new EU Mobility Package rules however will influence our driver management systems much more than COVID-19, as compliance will require a long-term strategic change. The combination of both at the same time is like an earthquake for the sector.
With the global driver shortage, how do you compete with other companies to hire the best drivers?
Firstly, we do not wait for drivers to come to us; we actively look for them. Our network of reliable and talented managers promote our company values and personally contact prospective new employees. This approach has proven to be effective, as people trust personal connections much more than job advertisements.
How do you see this in the long term, will driver shortage continue to be an issue?
There will be always be a shortage of good drivers. Simply holding a driving licence is no longer enough to be considered a professional driver.
The driver’s role is now much more varied; it requires daily interactions with customs and an understanding of vehicles. To overcome this gap, we have introduced a three-week induction programme for new drivers in which they learn from qualified drivers through a buddy programme.
Driver shortage means that most of our drivers come from outside of Europe. Many European companies have adopted this strategy to ensure a sufficient workforce. What is special about Hegelmann is that we have an international management team that helps us better understand cultural differences and anticipate risks related to potential knowledge gaps.
What would you say to encourage other companies in the transport industry?
We are all adapting to the considerable changes in our industry. We at Hegelmann believe that our experiences will help us adapt to these changes relatively quickly. My advice would be: you might win, you might learn, but you will never lose.