If you are involved in intercontinental supply chains, you perhaps have an hourglass view of the world. Not only is time ticking away but goods, like grains of sand, have to be funnelled through small corridors in order to get where they are going. These locations literally have a stranglehold on supply chains and nowhere is this more the case in Europe than Benelux. Despite the poor performance of major world economies compared to the last few years of boom, most goods still come in to continental Europe via Rotterdam, Antwerp and Schiphol.
Perhaps you are the financial director or property director of a logistics company. You can understand that geography, is the enemy of costs. And to be where you want to be in Benelux is going to cost you.
Some speak hopefully of the rise of Le Havre, Hamburg and Marseille. Perhaps those areas will be the best places to bring in goods and perhaps land there will be cheaper. But nobody can doubt the massive strength and growth of Rotterdam in terms of cargo. The Port of Rotterdam handled 406.81mt in calendar year 2007, including container cargo of 10.8 million twenty-foot equivalent units or TEU. Rotterdam thus became the first European port to break the barrier of 400mt of cargo and 10 million TEUs. Later this summer, the port will see construction start of new €1 billion sea defences, the Maasvlakte 2 project. The terminal there will have a 1900-metre long deepsea quay with a depth of 20 metres, a 550-metre quay for inland shipping and feeder vessels and its own rail terminal with a connection to the Betuweroute. It will have a capacity of some four million TEU. The terminal will be phased into operation, from 2013 onwards. Shortly thereafter, APM Terminals, who acquired a (future) site last year, will also start operating. In total, around 40 per cent of Maasvlakte 2 has already been allocated, although it will be six years before the first site comes into use.
The slightest twist in a European consumer trend can mean a colossal increase in goods going through Rotterdam. Throughput figures for biofuels in the port of Rotterdam doubled in 2007, for example, compared to 2006. It handled 1.2 million tonnes of biodiesel up from 250,000 tonnes and 1.6 million tonnes of bioethanol up from 500,000 tonnes. The Port Authority anticipates a further expansion of this market.
It is something like desperation that drove the Port Authority to find news ways to push goods through by looking to improve rail. In January, it signed a letter of intent with Deutsche Bahn promising the two organizations would work more closely. Rotterdam”s problem is relatively poor hinterland connections. Dr Sebastian Jürgens, head of the DB Intermodal Business Unit, says: ”In Hamburg, rail has a modal split of 32 per cent, whereas in the case of the Port of Rotterdam, it is currently only 11 per cent. We still have a lot of room above that figure, and want to exploit this potential with new coordinated services, such as the creation of new hub and spoke concepts.”
In 2007 the port of Antwerp handled 183 million tonnes of freight, representing growth of 9.3 per cent compared with 167 million tonnes in 2006. The main engine of growth was general cargo, with a sharp rise in container volume yet again. The volumes of ro/ro and conventional breakbulk too show good growth figures for 2007. The container volume is rising almost twice as quickly as the overall freight volume, with an increase of 17 per cent, to 95 million tonnes. In terms of TEU the growth works out at 16.5 per cent, with a total volume of more than eight million TEU. The Deurganck container dock for its part handled more than 1.5 million TEU, an increase of 89 per cent compared with 2006. The largest growth in container volume was in freight carried to and from China, Brazil, Malaysia and the USA.
Keeping close by
Piet Boogaard is chief executive officer for NYK Logistics North Continent Region, which includes Benelux. He says: ”Rotterdam itself is pretty full. That”s one of the reasons we are just outside Rotterdam. We are now looking to go even further outside – but still within what our clients consider to be the port area.”
Boogaard is not impressed by the port”s rail project. ”Rail is not influencing our decision,” he says. ”Most of the goods that leave our warehouse leave by truck. The goods come to us from the port by truck or barge.”
Among innovations at Antwerp, Mitsui subsidiary Intercontinental Terminals Company and Rubis Terminal have formed a joint venture company in order to build a new bulk liquid chemical terminal in the Port of Antwerp, Belgium. The new 110,000 cbm terminal will store and handle various liquid chemicals, gases and petroleum products. The new terminal will be located on the left bank of the Schelde River. Antwerp is one of the world”s prime locations for the petrochemical industry. The consistent industry growth requires additional infrastructure for marine and land logistics. The terminal will be strengthening the logistics facilities in the Antwerp chemical cluster and will support the growing need for storage of petrochemicals for the European market. With time, the joint venture intends to grow the facility to a total capacity of 400,000 cbm.
The construction of the first phase will start this year while the start up of operations is planned for the second half of 2009. The terminal will have a deepwater jetty with six berths capable of handling large size chemical tankers, coasters and barges. The terminal will have the required rail and truck handling facilities and is authorised to handle a wide range of chemical liquids and gases.
Bridge Logistics development
At Willebroek, property consultant King Sturge is agent on the new Bridge Logistics development by De Paepe-groep, which is owned by Axa Belgium NV. It consists of 28,000sq m of logistics space and is located 15km south of Antwerp, along the A12 Antwerp-Brussels highway. King Sturge acted in the pre-let of a 12,000sq m warehouse to Anixter in the first phase. The second phase of 16,000sq m will be completed this year and is available to let.
At 3.5 million tonnes of freight, Schiphol is Europe”s third-largest airport in terms of freight volume. As well as being a magnet for logistics developers, the airport lets its own cargo buildings. Rhenus Freight Logistics has signed a tenancy agreement with Schiphol Real Estate for the lease of a new cargo building along the Schiphol-Southeast cargo platform. The building will total 8,000 sq m of commercial space and 2,000 sq m of office space. It is intended for first and second line transfer activities, comprising ground handling and shipping of goods.
Phase two of Schiphol-Southeast aims to make it a centre for forwarding agents and logistics service providers, offering direct access to the cargo platform. The location makes it possible for companies like Rhenus Freight Logistics to direct ground handling and forwarding activities in an integrated fashion.
Rhenus Freight Logistics” new premises will be providing facilities for the air cargo companies Road Air, KDS Cargo, Racon Air, Rhenus Wilmink and the ground handler Airport Cargo Handling. The Moen en Van Oosten architectural agency in Rotterdam has been commissioned to design the cargo building. Construction is set to start in the latter half of 2009, with completion scheduled for the first half of 2010.
AMB Property Corporation developments have been doing well. Close to Schiphol Airport, Schenker has taken a 10,300sq m warehouse at the AMB Fokker Logistics Centre. AMB also prelet 12,100 sq m in a development project close to Brussels International Airport and the Port of Antwerp. Fashion retail company C&A Belgie CV has taken the AMB Boom Distribution Center in order to expand its distribution capabilities in Belgium. C&A Belgie national distribution manager An Van den Wijngaerde says he ”The problem facing logistics companies is the difference in contract periods between what developers demand and what clients want. Customers are tending to a contract period of three years, where developers want contracts of five-ten years”signed for the space because of the ”significant growth” of C&A”s business activities in Belgium.
AMB Boom Distribution Center is a 40,600 sq m development located in the A12 corridor connecting the property to the Port of Antwerp, the third largest European container seaport, and Brussels International Airport, the 7th largest airfreight handler in Europe.
AMB focuses on major hub and gateway distribution markets throughout North America, Europe and Asia. It likes to build what it calls ”High Throughput Distribution” facilities, which are industrial properties built for speed and located near airports, seaports and ground transportation systems.
Mo Barzegar, AMB”s managing director Europe, says he sees strong demand in Belgium for ”highly efficient” logistics facilities. He says: ”There”s a lack of modern supply that is capable of catering to customer needs.”
Even away from Benelux”s air and sea hubs, distribution space has been letting. Among a raft of leases it has signed with ProLogis, DHL is taking 17,700 sq m leased at ProLogis Park Venlo III, a new 45,000-sq m industrial park located in the city of Venlo, less than five kilometers from the German border. DHL will operate the space for Hannspree, a global television retailer, serving northern and western Europe. The building is one of several facilities comprising Trade Port West Business Park, a major industrial hub under development along the eastern border of the Netherlands. At the same time, DHL took 39,000 sq m outside Madrid and 23,000 sq m in Sweden, all of it from ProLogis. DHL is ProLogis”s largest global customer. At the end of 2007, ProLogis had agreements in place for more than 725,000 sq m of space with DHL in 10 European countries.
They may be pals but DHL does not take all of its space from ProLogis. At SEGRO”s Bornhem scheme, located within the ”Golden Triangle” of Brussels, Antwerp and Ghent, SEGRO built the first building for DHL/EXEL with an option for future expansion. The second phase of development is currently under construction and will be available by the end of March 2008. This will provide approximately 14,000 sq m of warehouse / distribution space with a flexible office content. The development provides occupiers with flexible storage and distribution space which can be sub-divided to provide units from 4,000 sq m upwards.
Rents hit a high last year of €90 per sq m per annum at Schiphol Airport, according to property consultant CBRE. It put rents for high-quality space in good locations elsewhere in the country at around €50 per sq m per annum. Rents for older properties and secondary locations are lower – somewhere between €35 and €45 per sq m per annum.
In the autumn last year, property consultant Knight Frank put prime logistics space rents in Amsterdam at €80 per sq m/year and Brussels at €65. However, it predicted that Amsterdam was behind Brussels in terms of the property boom-bust cycle so rents in the Dutch city had further to climb.
Benelux”s position as a continental distribution base rather than a base for regional distribution is currently protecting it from a rental downturn. ”We have a lot of European distribution centres,” says Boogarard. ”It is other parts of Europe where there are regional centres that we are seeing economic downturn.”
The problem facing logistics companies such as NYK is the difference in contract periods between what developers demand and what clients want. ”Customers are tending to a shorter contract period of three years, where developers want contracts of five-ten years,” says Boogaard. ”That is mainly for new space. With existing property, landlords are more flexible.”
- Rents for new space in Benelux: €50- €65 per sq m per annum
- Secondary space rents: €35-€45
per sq m per annum
- Highest rent in 2007: €90 per sq m
- Netherlands total stock of modern large
logistics space19 million sq m
- Netherlands new large space take-up
for 2007: 1.1 million sq m
Source: CBRE / Knight Frank