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Europe & Middle East Outlook

Dumagas
logistics
road freight
Romania

DUMAGAS

The Transport Transformer

Having successfully restructured its entire business model, Dumagas now stands proud as a transportation services leader in Romania

Writer: Tom Wadlow

Project Manager: Richard Thomas

 Despite clear and obvious challenges, Eastern Europe’s logistics industry recovered during the course of 2017. 

Specifically, research body Transport Intelligence highlighted Romania as a market showing particular promise, its road freight sector alone expected to grow by €1 billion between 2018 and 2020.  

Romania is seemingly shielded from some of the unfavourable conditions facing the wider continent, be it staff shortages or lagging investment in infrastructure, and companies like Dumagas are playing its part in ensuring the sector continues to develop strongly. 

The transport pioneer has been particularly successful in attracting and retaining skilled employees, which for CEO Mircea Vlah are the Company’s most valuable assets. 

“Dumagas Transport S.A. holds the highest expertise in managing trucks and drivers in Romania,” he says. “This represents a high-value asset nowadays as drivers are hard to find and manging a low margin business becomes heavier for all transport companies.”

Operating a fleet of 200 owned and 200 subcontracted trucks alongside a 5,000 square metre low temperate warehouse, Dumagas generates 80 percent of its revenue from full truck load activities and 20 percent from logistics. 

Such services include transportation of general cargo, car carriers, industrial gas tankers (argon, nitrogen, oxygen) and low temperature warehousing and distribution of food.

“We operate with modern processes and procedures which allow us to have an exceptional control of operations and take quick action to change course and improve results month by month,” Vlah adds. 

“Everything is managed by our ERP system, which is set up with real-time management dashboards for revenues, costs and results estimation by truck and by fleet.”

Dumagas – the story so far

Dumagas began life as a family firm in 1996, its core activity being gas distribution services. 

In the ensuing years the Company diversified into road freight for other specialised industries such as food and car carrying, before selling a 50 percent share to British investor Bancroft Private Equity in 2010. 

This became a 100 percent stake in by the end of 2013, with Vlah arriving the following year to lead an organisational restructuring, a process which lasted until 2016. 

Today Dumagas operates out of its HQ in Craiova and operations office in Turda, with X-docks in Cluj-Napoca, Brasov, Timisoara, Bucuresti and Bacau.

A company transformed

In getting to this point, Vlah and Dumagas underwent a significant transformation process to ensure its financial longevity. 

“My first objective was to stabilise operations, avoid financial collapse and restructure the Company from an entrepreneurial basis to corporative model,” Vlah explains. “This transformation happened from March 2014 until June 2016.

“This involved becoming transparent about results and figures – all operational teams and middle management started to get access to our results each month. We also started to measure performance by truck and by department, day by day, and discuss internally how to improve it.”

Such trucks have been subject to a sweeping upgrade programme, a four-year plan designed to completely refresh its fleet and ensure it is among the most modern on the market. 

“We constantly look for new technology to reduce fuel consumption, to monitor and improve operational performance, and to adapt communication and telematics measurements,” Vlah adds. “We only operate new tractors that are less than four years old. Three years ago, we launched a carbon-free programme by offsetting our carbon footprint for the entire fleet.”

Another focus has been on cash flow. Whether it be tightening up payment terms or improving visibility of the collections process with customers, Dumagas has been able to improvement its financial standing regarding cash in the bank. 

Powered by people

The final component of Vlah’s transformation plan, and arguably the most important, involved boosting investment in Dumagas’s employees. 

“We invest in people and have developed a culture of communication and work which is hard to find in similar companies from the same industry,” he says. 

This has helped harness a promotion from within ethos, with all management appointments being initially looked at internally before searching for outside candidates. 

Once on board, staff are offered extensive opportunities to train and develop. “Over a one-year cycle we try to cover each full-time employee with 52 hours of training both ‘at-the-desk’ and externally,” Vlah continues. 

“There is a teamworking element that bounds our team together and gives supplementary motivation, and this was one of the key ingredients which saved our company from insolvency. I am grateful to my team for their outstanding performance which today gives us the chance to talk about future plans and sustainable development.”

Indeed, a settled and motivated workforce will only serve to carry Dumagas forwards into the next chapter of its story. 

For Vlah, expansion into new markets is very much on the radar. He concludes: “In three to five years’ time I should be able to report a steady growth of company revenue, profit and equity value. I want is to drive overseas extension in the EU and beyond EU borders and extend into air, ocean and multimodal transportation.”