The unstoppable escalation of energy “heats” the sector

Jose Manuel Sinova Country manager of Logisfashion Spain

“Since Logisfashion we are in favor of subsidizing green energy as the preferred power source»

Have you had to adopt any type of special measures to reduce the energy bill? What is the true dimension of the energy problem?

Indeed, we have had to adopt a series of measures to mitigate the impact of the energy problem. In this sense, the measures adopted consider two plans: on the one hand, contracting, and, on the other, measures for budget and investment management.

In 2021, at Logisfashion we have mobilized in the market to try to find contract options with distributors and marketers that were more profitable for us. After a series of negotiations, in October 2021 we managed to close a 2-year flat rate contract in those centers where it was possible due to the size of the business. In this way, the supply points of the centers of Santa María de Palautordera (Barcelona), Riudellots de la Selva (Gerona) and Cabanillas del Campo I (Guadalajara) were able to adhere to this fixed price agreement.

In any case, if we value and take into account the high degree of automation and classification of the centres, as well as the notable level of consumption and the impact of the rise in prices, at Logisfashion we consider this negotiation to be entirely profitable, since we are paying 70 euros per KW/H as opposed to the currently stipulated 200 euros KW/H.

Although, on the other hand, we also see the true dimension of the energy problem that you asked about and it is that, in some places, it is very difficult to establish this type of measure, not only because of the size of the spaces, but also because of the very considerable rise in electricity price. Only in our warehouse in Toledo, which measures about 80,000mtwoat the beginning of 2022 we have doubled our energy expenditure and it is now more than 60,000 euros per month.

Other measures adopted with a view to optimizing the level of electricity consumption in order to reduce it to the maximum and continue to maintain, at the same time, the constant flow of operations is, for example, a system of submetering which consists of the implementation of individual meters that indicate the energy pulse of each zone. With the data, we identify which places require more energy and, depending on the results, we apply different mechanisms to save on consumption. These saving actions happen, for example, by limiting the temperature of the heating at certain times of the day, installing self-consumption plates or having lights by movement sensor in the less crowded floors.

We also know that the new centers (Ontigola, Cabanillas 3, Toledo) have better quality and energy efficiency standards and are built in a more sustainable way (LEED Silver and Gold certification), which opens up more possibilities for us to improve the energy efficiency of the future centers.

What kind of measures do you think the administrations, the Government, should take to stop these increases?

The climate emergency is open to all parties, Administration, companies and citizens, and it is a matter of morality and social responsibility to act in favor of meeting international objectives. It is true that, as business interests and other government issues also converge, it is not an easy debate to resolve.

Since LogisfashionOf course, we are in favor of green energy being subsidized as a preferred power source, as well as the approval of aid for companies that intend to advance in the energy transition as part of their sustainability plan. Much more considering that Spain is a country with great potential for the development of renewables and for becoming a European benchmark in this regard.

doWhat percentage of the cost of energy is included in your price list? Is it inevitable to pass on the new energy costs in the final price?

Yes, it is unavoidable. In our case, in the clients we work with open book We apply a business model in which the invoice is rebilled as it is in its original form and, for the rest of the companies, the final price is implicit in the rate because we only increase the CPI. But, be that as it may, the truth is that we are losing something.

For us, the cost of energy represents 3% of the rate we charge or, what is the same, of the total expenses we have. In any case, raising that percentage or not is not a priority because there are other issues that can have a greater negative impact on the business at a global level and that concern us more compared to this factor. We speak, for example, of priorities such as the evolution of the labor reform or the negotiation of agreements, which will always be decisive for the development of our business.

Do you understand that this new energy situation is here to stay or is the problem temporary?

Unfortunately, Spain is still a dependent power at the energy level and must abide by the rates and prices that are stipulated. In addition, this factor added to the international instability that exists with respect to the energy negotiation, means that this situation is indeed structural and will continue, at least, for the next two years.

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