Monday 24th Oct 2016 - Logistics Manager

The quiet revolution in logistics

Manufacturers and retailers moving to Central and Eastern Europe (CEE) want their western European-based logistics providers to make the step with them, according to market analyst Datamonitor. Slovakia and neighbours such as Poland and the Czech Republic have seen substantial inward investment in recent years as Western-based automotive, consumer and electrical manufacturers move production to CEE countries.

Datamonitor says this trend offers promising growth opportunities for Western European-based third-party logistics (3PLs). While this emergent region holds potential, it is also subject to certain constraints. However, as underlined by the very presence of so many large, blue chip companies, the region’s benefits outweigh the disadvantages.

Many large Western European-based manufacturers and retailers have been moving into Central CEE to take advantage of cheaper, skilled labour and new consumer markets.

Retailers such as Metro, Carrefour and Tesco have for some time been expanding into countries in Central and Eastern Europe. These retailers’ considerable distribution and warehousing operations require capable supply chain partners, and also represent large contracts, and so the same 3PLs they work with in their home markets have usually followed them across national borders.

Manufacturers also provide opportunities for logistics providers to expand client relationships, although the pattern can have slightly different implications. For example, Western European carmakers, under extreme competitive pressure, have relocated substantial production capacity to lower cost manufacturing locations such as Slovakia, Poland and the Czech Republic, and parts suppliers have also made the move, to make up for the displaced production in Western Europe, and to seize the opportunity to expand their relationships with their clients.

However, Datamonitor warns that investment will be required to upgrade and support the vital logistics functions as the road, rail and warehouse infrastructure is comparatively underdeveloped.