Stefan Dimitrov, managing director of Allied Pickfords, spoke to Moving Forward about the business of moving in Bulgaria and beyond. Allied Pickfords international relocations specialists offer a full range of moving and relocation services, including: moving from and to Bulgaria, packing, fine arts certification, crating and shipping, temporary and long-term stroage and records management, as well as additional services such as residence and employment permits, visas, home finding and orientation. “A complete solution”, or “one-stop shop”, as Dimtirov describes it. He says that this is the setup prefered by employers nowadays, as it means they can outsource the whole operation to a relocation company, who will take care of the entire process. This is a very different picture to that of the early 1990s when the moving service in Bulgaria was only really just starting to come into being. In the early 1980s and 90s, Dimitrov says, people used to make a lot of money, especially on corporate-paid moves, but after 2001 – with the combined effect of September 11 and the stock exchange crisis – individuals and corporations began looking into the cost of moving services a lot more and it was no longer simply a case of accepting the first offer.
“The moving industry around the world has less 35 per cent tonnage since 2001 because either people have concerns about moving abroad or corporations lack the necessary finances.” This makes for a very competitive market.
In Bulgaria, most moving companies were legally established in about 1994, four years later than Dimitrov’s company, which was established in 1990. The market only really started moving in 1995 or 1996, Dimitrov says; before that, during communism, diplomatic missions coming to Bulgaria would use moving companies from neighbouring countries.
“Because this is a very attractive business, even today, five or six years after the big crisis, everybody thinks that there is a lot of money to be made: wrong, it’s very competitive and requires knowledge and experience that can’t be found in a book.”
Of the other companies in the sector Dimitrov says: “I never call companies competitors, I only have colleagues. I think that all of us have a more or less similar lifestyle in the workplace, dealing with the everyday issues of having goods on the road, going through terminals, customs, etc. I don’t think that we’re in a position that we should be looking with fear at who’s taking bites from us. We’re setting the standards in this country”.
Of course, there is competition for customers, he says and “we meet everyone from time to time because we are everywhere; competition is good because it is the only way to keep within our team the feeling that we have to strive to do better every day. This is very important, it keeps us alive”.
Bulgaria’s EU accession will affect both the client base and the infrastructure in the moving sector, says Dimitrov. “On the client base, you will see that less and less multinational corporations are willing to send expatriates here.” Except for the very large corporations, such as banks who may still employ foreign CEOs, most companies will train local, talented Bulgarians for top management positions, says Dimitrov. “So, on the corporate side, if you expect lots more people to move to Bulgaria, don’t have high expectations.”
However, he does believe that more private individuals will come to live here permanently, especially from the UK. This will mean that good infrastructure and links between Bulgaria and the UK will be very important, something that Allied Pickfords already has established. “We always have at least two trucks on the road between the UK and Bulgaria.”
In terms of infrastructure, he thinks that the Bulgarian trucking industry will be doing very well. “There are very unclear signs coming from the Transport Ministry about a lot of things, such as the necessary permission to drive from a second to a third country, but Bulgaria will be signing and will be implementing, by the book, all the EU regulations.”
The success of truckers in Bulgaria will have an impact on European trucking companies. “But then, they’re free to come and establish their business here – buy trucks from Bulgaria and register them in Bulgaria.” This makes great sense, says Dimitrov, as taxes are much lower than in countries such as Greece. “Register your trucks, register your companies, do business in Bulgaria. Bulgaria is a great place to make business.”
He is very positive about the business environment in Bulgaria. “I don’t think corruption is a big factor in this business sector,” he says. He acknowledges that improvements are needed in the judicial and law enforcement systems, but says that in general Bulgaria is a great place for business. “Just as it is important under which flag you register your ship, if you’re in the trucking business, just come to Bulgaria. Whoever has a Bulgarian-registered fleet has an advantage: the economical advantage of paying less taxes because our Government has been reducing corporate taxes significantly, they will have less to pay to the drivers, and we have a simple, transparent way of registering and running a business here.”
Under the EU, there will be clear access to the UK; it shouldn’t make any difference whether you are transporting goods between Varna and Plovidv or between Athens and Rome. “Europe is going to enjoy a more competitive trucking market, which is going to benefit everyone. It won’t happen overnight, but if everything goes according to plan with Bulgaria’s EU accession and there are no clauses in that particular section, which I don’t believe there are going to be, this is going to work for a lot of people.”
Moving on up?
Voerman movers and Cyril Peuch of AGS shared their experiences in the moving sector in Bulgaria with Moving Forward.
The sector at present
AGS: According to Peuch, the moving business is growing slowly due to the increase of incoming expats. However, unfortunately, so far, there has not been enough investment to reach the level of countries such as Romania, Slovakia, the Czech republic or Poland, he says.
“The market is still small and perturbed by some transport companies without any worldwide network that offer low quality services, for low prices.
“Who would believe that you could buy a Mercedes for the price of a Skoda? It’s the same in the moving business – usually a realistic price based on VIP services, references, and a strong worldwide network reflects the quality of a company. A local mover cannot provide the same expertise as an international mover with a real worldwide network,” says Peuch. He doesn’t believe that franchises can provide this either.
Voerman: The market for the ‘moving personal belongings’ service on a local, national and international scale, is not developed enough in Bulgaria, in comparison with the market in other countries, says Voerman. They attribute this to four factors:
· Complex moving services of the ‘door-to-door’ type have only been offered for a short period, and are not popular or well-understood in Bulgaria.
· Users of international services are mainly embassies and large international companies that have separate divisions responsible for employee moving. These companies operate on long-term contracts with moving companies, which are offered and signed outside the country. Bulgarian companies serve as agents or local partners when it comes to package processing. As a result, there is no real market when it comes to big projects in Bulgaria.
· All companies operating on the Bulgarian market offer, apart from the complete service, some of its separate components like storage, transport and packaging. In this manner, they attract local clients, but lose the advantages of the complete service. Among these advantages are security, flexibility, reliability and speed.
· Market competition is strong due to the small number of clients. Competition develops in two directions – on one side foreign moving companies try to attract clients, and on the other, Bulgarian companies are competing with international movers. Local companies offer cheaper prices. This competition decreases overall prices, but often leads to compromises in quality since the limited number of projects does not permit radical changes in organisation and the technology used. As a result, expenses cannot be taken down.
The future of the sector
AGS: Peuch says that Bulgaria does not have big potential in terms of its population compared to other eastern EU countries. However, the fact that no big supermarket chains (such as Carrefour, Tesco, etc.) are present in Bulgaria, is a sign of market potential.
“Bulgaria is not very well situated because of the borders with the Balkans,” says Peuch. “The road to the western EU goes through the Balkans, where trucks spend days crossing the customs border and have to pay bribes. Companies that want easy transit of their goods to the western EU take this into consideration.”
Peuch says that Asian countries are becoming very attractive and are catching the eyes of multinational companies from the eastern EU countries, in the same way that companies in the western EU countries were attracted when the eastern EU market appeared.
Finally, he says, the corruption level in Bulgaria, as well as at the level of customs offices, is also a hindrance in the development of the movers’ sector.
Voerman: Voerman does not expext significant changes to the market status quo until the end of 2006, when they expect that, after Bulgaria’s EU accession, the demand for moving services will increase due to:
· Free movement of labour force and students within the EU member states
· Increased solvency of the Bulgarian citizens working or studying abroad
· Increased foreign investment in Bulgaria. A number of foreign companies are waiting for Bulgaria’s EU accession before they enter the local market. This development in turn would lead to higher numbers of foreigners living and working in Bulgaria.
· Removal of administrative hindrances for property purchase by Bulgarian citizens abroad and foreign citizens in Bulgaria. This would lead to natural migration and the need to move one’s belongings.
· Increased number of imigrants looking for work in Bulgaria.
Regulating the sector
AGS: Change will only come when Bulgarians make political changes to improve the general situation, says Peuch. “The international companies are starting to increase salaries – this is a very big point – and I hope that more companies will follow in this way.”
Voerman: “Bulgaria lacks a law regulating the moving of personal belongings. Various aspects of the service fall under transport and logistics regulations, as well as laws for customs activity and goods storage. During negotiations with clients, companies use internationale trade practices. Most international companies operating on the Bulgarian market have a quality certificate and work in accordance with the standards of international institutions.”
Market leaders in moving
AGS: ”AGS Bulgaria is one of the leading moving companies, as our turnover comes exclusively from international moves. We have been present in Bulgaria since 1997,” says Peuch.
AGS is also the only international moving company with more than 100 branches worldwide in more than 67 countries. “A real, fully-owned network, without franchises!
“The AGS network includes the eastern and western EU, Asia, Africa and, more recently, branches in India. Of course, we cover all other parts of the world with our agent’s network,” says Peuch.
“All our packing material is imported from France and the local staff is sent for a few days a year to have training in France to improve their skills.
AGS are the biggest movers in terms of network and expertise. We offer VIP services with expatriate staff to offer the same quality as you could get at our Paris, London, or Le Cap branches.”
Voerman: “Voerman was one of the first companies in Bulgaria to start creating the market sector more than 19 years ago (although then under a different name). Because of this, we can say there are no secrets in the field and most other companies learned from our experience. At the moment, we try to maintain our innovative thinking by introducing the best European practices. The high qualification of our employees and the annual training in our Dutch central office play an important role,” says Voerman.
Company performance and trends
AGS: “The management of the branch changed at the end of 2005 to develop the branch and to become the first moving choice as AGS is in many countries where we are present.
“The year 2006 started extremely well, the turnover increased more than 30 per cent thanks to our clients and accounts!” says Peuch.
Voerman: During the previous year, Voerman noticed the following tendencies in the moving sector in Bulgaria:
· The number of inquiries and deals concluded with Bulgarians is on the rise. This shows that the popularity of these services is increasing, as well as the solvency of Bulgarians.
· People are realising what the benefits of using specialised ‘moving’ companies are, instead of using cheaper versions. In most cases such ‘cheaper’ alterantives are related to additional work and tension and in some cases can lead to material losses due to the damage or loss of personal belongings.
· The number of inquiries from foreign property owners in Bulgaria is also on the rise.
· The work with foreign corporations, concluding long-term contracts, has remained at a high level.
· The interest toward additional services offered by moving companies is on the rise. The management and storage of archives, specialised activities related to the moving of expensive artwork and antiques are among these specialised services.
Increased competition in 2007?
AGS: “I guess that the market will grow up, but I do not believe that new players will be able to come to the market. I have seen that in my previous branch in Slovakia, with movers that tried to enter the market and closed their branches after few months,”says Peuch.
Voerman: Voerman expects more competition in 2007 for two main reasons. First, they say that some of the Bulgarian companies that started offering porter services are developing fast and increasing the scope of services offered. On the other hand, they say that, after Bulgaria’s EU accession, other major multinational moving companies are expected to start investing in Bulgaria, which would further increase the competition. “It will also lead to decrease of prices, while the quality of services will remain high due to the enlargement of storage places and projects, a decrease in the duration of customs and administrative procedures, and optimal usage of the developing logistics infrastructure in the country.”
