In just three years of activity on the profile market in Romania, the freight forwarding company IB Cargo has doubled its turnover, and the obtained profit from last year has been three times bigger than the one in 2009. Established on February 2008, through a coommon investition of the Interfacht company from Germany and Beyer Logistiek company from Holand, IB Cargo has had, in the same year, a turnover of EUR 2.5 millions, while in 2009 and 2010 the company recorded turnovers of EUR 3.30 millions and 4.45 millions. The IB Caro management forecasts for 2011 an increase of 25% towards last year, the projected turnover being of 5.5 millions euro. Nowadays, the company has three offices in the country (Bucuresti, Constanta si Timisoara) with 24 employees.
While recent local economic trends may be giving some companies a sinking feeling, others are finding ways to fly high and score profits in stormy times. Catalin Putineanu, managing director of IB Cargo, a local freight forwarder, chose to invest in some relatively unknown services on the Romanian market in 2008. Two years later, he says the gamble has paid off and he is looking forward to future growth.
Putineanu got into the business of freight forwarding by sheer chance. After graduating from the Academy of Economic Studies in Bucharest in the late 90s, he soon realized that locally there were few opportunities for a new graduate. “Like many of my peers at that time I decided to leave the country and so I went to the US. There I was offered by chance a job in freight forwarding. I liked it and so I decided to continue on this path,” Putineanu explains. When he decided to return to Romania five years later, he was working as operations manager for the US and Canada at American President Lines (APL), one of the major global players on the international freight forwarding market.
Back home, after working for almost a year for Cargo Partner he left the company along with Kees Cramer and decided to start his own business. “This was a plan that I had been considering for a long time,” Putineanu says. IB Cargo was founded in early 2008 with an initial investment of EUR 150,000. The entrepreneur was motivated by his belief that freight forwarding services had a great local growth potential in spite of the forbidding economic context. Putineanu adds that the results he has registered so far have shown he was right.
Putineanu is one of the company’s four shareholders alongside Igor Jitta through Jitta Capital and two foreign companies, German Interfracht and Dutch Beyer Logistiek. “I met these two companies, which after seeing my business plan decided to invest. They brought in the money and I started the business. What I was most interested in was the freedom to take the decisions I wanted. And I was allowed this,” he says.
The company has its headquarters in Bucharest but operates two more offices, one in Constanta and the other in Timisoara. “We started with an office in Bucharest and another one in Constanta because from the beginning we planned to focus on sea freight services. Now we are the top local provider of LCL import services through Constanta port,” he explains. The office in Timisoara was opened later on to cover domestic road freight.
Freight forwarding is a concept to which local companies are relatively unaccustomed. IB Cargo is non-asset, which means that it doesn’t own any means of transportation of its own. Putineanu remembers that in the beginning this was something that made some local companies regard him as some sort of a jobber.
“We offer integrated transportation solutions by road, sea and air. This is something that a common carrier cannot supply. In addition we also have expertise in all these areas and so we can offer clients the option of choosing the best shipping option for their needs,” he adds.
The beginning of the business proved challenging. “Back then we were a no-name and this made it hard to get the business partners we wanted. Now we have contracts with all the airlines and sea shipping companies that operate in Romania.” Putineanu adds that if he were to start all over again he would only begin earlier to encourage an “out of the box” way of thinking among his employees as he believes that this is the source of future growth.
In the first year the company registered a EUR 2.3 million turnover and the next year reported a 50 percent increase. “We knew the business would grow significantly in 2009 in spite of the crisis because there is a shortage of such services on the local market. The growth would have been higher had it not been for the collapse of sea freight rates in the first months of 2009. However this had a positive effect on our profit margin,” he says. This year the company plans to reach a EUR 5.6 million turnover. “We have the great advantage of being a flexible company and the market is also a generous one” he concludes.
Competition has become tight lately but Putineanu says that the market is still underdeveloped and the concept in itself is only beginning to be understood. “The potential for future growth is huge but there are still setbacks such as the lack of adequate infrastructure and the bureaucracy,” says the businessman.
In the future the company intends to extend by offering additional services such as storage, repackaging and labeling and by considering the possibility of partnerships with local and international companies. There have also been some takeover propositions but Putineanu said this was not an option as the company plans to remain independent.
Freight forwarder IB Cargo’s strategy in the crisis is not to slash prices, but to focus on niche sectors such as combined sea‑air‑land services.
“Once a firm lowers its tariffs it is hard to go back,” says Catalin Putineanu, managing director of IB Cargo.
Putineanu’s plans for the near future does not include acquisitions on the local market, but he does consider opening an office in east Romania by the beginning of 2010. The company already has three offices in Bucharest